This is Connections.

I'm Evan Dawson.

Our connection this hour was made in July with the passage of a piece of legislation that you might have heard, referred to as the Big Beautiful Bill.

Now, we've talked a lot about some of what is in the bill.

We've talked about Medicaid, Snap, for example, but we really haven't discussed how that bill could affect your tax bill.

A temporary senior bonus deduction, salt cap relief, a child tax credit, estate and gift exemptions.

529 plans.

It's not always easy to keep up with the changes.

And this hour, we're going to welcome some experts who are going to help us.

And we're getting away from the politics.

And we're just talking about the nuts and bolts of this.

And listeners, if you've got questions about any of these various areas of your tax bill, what you pay and why.

I already have a great question on salt.

Like, what is it?

So there's a lot that we're going to talk about here.

And both of our guests are partners with me and Co Kristina Stamatis is with us.

Thank you for being with us this hour, for having me.

Anthony Scinto as well.

Thank you for being here.

Thank you.

me and co is what guys tell tell our listeners what you guys do.

>> Sure.

We're a regional public accounting firm.

We we do your standard things in the assurance realm, tax and advisory.

We're about 200 people, 30 partners across four different offices in upstate New York.

>> You want to just talk politics for the hour?

>> Oh, jeez.

No.

>> No.

>> I think there's enough people talking politics out there right now.

>> Anthony and Christina are looking at me like, you know, you called us yesterday, and you baited and switched, and we didn't think we were.

We're not talking politics.

We are talking about just the mechanics of of how this could affect people.

And it's a lot of different areas.

We're going to kind of work through it in depth because you know, I realize it's September, but if you're like me, you always get to March and April and you're going, why did I not think of this before?

Why am I not prepared?

What does any of this mean?

And some changes could be coming your way.

So I'll ask both of you.

Just for starters here.

Anthony, is there, like, a headline that comes out of this to you?

Is there a biggest change portion of this that comes out to you?

>> I focus a lot of my time on looking at the business aspect of it.

So for me, when I think about it, this is a huge opportunity for businesses to really go all in on investment.

And there's a number of different provisions in this bill that provide that opportunity for businesses, whether they're investing in new property, they're investing in additional research and development activities.

There are a number of provisions that make that easier for them and will provide some additional tax relief to allow them to do that.

>> okay.

We'll be talking about that coming up here.

Christina, what about you?

>> For me, I think the most broad reaching provision is the salt cap increase.

I think that's going to impact so many New Yorkers because we can deduct now more of our property and school taxes, as well as our state income taxes, which is especially relevant to New Yorkers as we're in a high property tax and high income tax state.

>> that's exactly the subject of an email I got from Clayton this morning.

So actually, I'm going to start with that in a second.

Clayton listeners, if you've got questions about any of these various issues that we're going to be talking about, I have a question on the child tax credit.

We'll get to that coming up here.

you can email the program Connections at wxxi.org.

Connections at wxxi.org.

You can call the toll free 844295 talk.

It's 8442958255263 WXXI.

If you call from Rochester 2639994.

If you're watching on our YouTube channel.

Hello there!

You can join the chat there.

just don't call or email to yell at Anthony or Christina about politics.

They got nothing to do with it.

They're just doing their jobs, helping you understand what is in this bill, what might be different, what you ought to know about it, whether you're thinking about how it affects your individual bill, whether you're a business who's thinking about investing.

So that's what we're going to try to work through.

And I'll take Clayton's email first.

He sent out this morning and said Evan, we hear arguments about salt all the time.

For those of us not in the know, can you explain what salt is and how it works?

Clayton I cannot, but Christina can.

Salt stands for.

>> State, state and local.

>> State and local taxes.

Yes, but what's the context here?

Clayton wants to know, you know, what is it really functionally.

And what's going on here?

>> What's the big deal with that change.

Right.

Yep.

So this ob BBA bill that we've had is the first major piece of tax legislation since 2018, when we had the Tax Cuts and Jobs Act.

And so back in 2018, our state and local income tax deduction was capped at $10,000.

So many of us who previously itemized their deductions, where we take a deduction for state and local income taxes, mortgage interest and charitable contributions, they just took the standard deduction because that was higher, because our tax deduction was limited to $10,000.

So now with the bill with the change that cap has been temporarily increased to up to $40,000.

So many people are going to begin itemizing again, and they're going to be able to take advantage of the full deduction of property taxes, school taxes and income taxes.

Maybe not full, but a lot more than they previously were able to.

>> Will that be more work for individuals?

>> No.

the only additional work it may be is many people have stopped tracking their charitable contributions because they didn't get the deduction for them, because they weren't itemizing.

They were taking the standard deduction.

So you're going to want to track those receipts.

Again, those charitable deductions, even medical expenses, if you have enough medical expenses to deduct because you're most people are probably going to once again itemize.

>> okay.

Clayton, I do hope that helps.

Now for individuals, how much of an impact is this change in Salt going to be?

Christina.

>> It's big.

It's big.

I mean, I think the average tax savings for the average New York resident are going to be probably, I would guess, between 500 and $1,500 of additional tax savings, which I think is pretty significant.

>> okay.

You're nodding and then you want to add there.

>> Yeah.

No, I think that that that's right.

And I think to add to it there's additional opportunities to expand on that benefit.

More than just looking at that state and local taxes.

As Christina mentioned, there's now an opportunity to get more benefit out of things like charitable contributions.

And so we're we're hoping we saw a pretty drastic reduction in not for profit.

receipts, not for profit donations after this bill was enacted back in 2018.

And so we're hoping from a broader perspective that we'll see an uptick in those donations again, because of this benefit.

>> we saw a drop off in donations because of the lack of opportunity to write it off.

>> Correct?

>> Yes.

So there was a Seinfeld episode where Kramer.

Kramer tried to convince Jerry that, you know, he could damage there was I forget what what the piece of equipment was.

>> It's a write off.

>> It's a write off.

Do you remember?

Do you remember?

>> I have referenced that Seinfeld episode in so many of my presentations.

>> It's the best.

Because, you know, like Kramer telling Jerry, it doesn't matter.

You can write it off, everybody.

Everything's a write off now.

You can just write it off.

And Jerry goes, write it off.

What?

And Kramer's like and Jerry goes, you don't know, do you?

And Kramer says, do you?

I mean, the joke, of course, is nobody really knows what we're talking about when we say, write it off.

But in the real world in 2018, apparently there was a drop off in contributions to charitable contributions because perhaps of this, this capacity to write off, I don't know if we know how to do it.

For example, every year, if I've donated clothing, I'm like, does that is that a write off?

Like, if I extra old clothing to goodwill is that I don't even know what I'm.

>> Supposed wasn't?

You probably weren't able to take advantage of it, but now you will be.

>> So how?

But what do you do now?

So what's the difference?

>> Well, I think you've probably always given your accountant here.

I donated $1,000 to goodwill and they said, okay, thanks.

We'll see if you get any benefit from it, which you probably didn't on the federal, but you might have on New York State.

So now you're going to get the benefit for it.

So you might see your tax bill be lower this year.

And you might say, gosh, I'm saving more than last year.

Why is that?

And then the, you know, you're able to take advantage of these deductions now.

>> Now I'm going to be the student for a second and you're both going to grade me on the subject of write offs, charitable contributions, I think when I was a younger adult, I had this idea that, like, let's say you write $1,000 check to the human fund or whatever charity you want, there's another Seinfeld reference.

Don't give it to the Human Fund.

It's not real.

But whatever charity you like, $1,000.

I think as a younger person, I thought, well, now if my tax bill was $2,500, well, now it's $1,500, because I can write off that thousand.

I think the reality is I can.

Now the write off means it lowers the amount of income that can be taxed.

So I'm probably getting something along the line of 25 to 35% of that back, but not the full 1000.

>> A plus.

>> Is that right?

>> You got it.

>> okay, okay.

It took me way too long to understand that.

but both of you seem to think that this legislation should encourage more charitable giving.

>> I do, yeah, I agree with Anthony.

>> Yeah, it certainly gives you another benefit to look at.

I mean, certainly I think many people out there give charitably because it's the right thing to do and they believe in whatever cause they're giving to.

But now they have an additional benefit of tax savings as well.

>> okay.

there's a hold on a second here.

I just saw I got an email on this subject.

Before I jump to, we're going to talk about child tax credits and a lot more coming up here.

5 to 9 if you want gift exemptions, state exemptions.

All that stuff's coming up here.

Our guests have the expertise to answer just about anything you want to, I think throw at them in this realm.

I thought the email was from Elaine.

It's not.

That would have been really funny if Elaine is emailing.

>> Me.

>> About write off.

it's Emily, Emily says.

Evan, the issue with write offs is for work.

I work from home.

Can I write off the cost of my home computer?

Can I write off some of my office equipment?

Other expenses?

I never know how much I can write off.

That's Emily talking about writing off work from home.

So anybody who works from home, can you just.

Can you write it all off?

I'm going to do the Kramer.

>> Just depends.

It depends if she is a W-2 employee.

No.

So what, years ago, expenses against employees or individuals who are employed and receive a W-2.

Those expenses went away.

But if she is self-employed, then she can use expensive home.

>> okay, so I do a lot of my work for the show at home, but I'm employed by WXXI, right?

Therefore can't write off anything that I'm doing at home with it.

>> Correct?

>> okay, pretty simple way to think about that.

If you're self-employed, you're working from home.

Write it off.

I mean, I mean, how aggressively can you write off.

>> So that depends.

Just like any good tax.

>> Like a home lunch.

>> Or a business lunch, it depends from us today.

No, it's it's it's all about what kind of expense it is and how much you're utilizing your home office space for work rather than personal purposes.

So things like utilities, things like rent expense if you're a renter things that are broader than just that particular activity that you're working on that relate to the home itself, you only get to deduct a portion that you're using for business.

Other things, like if you have an expense, a meal, for example meals may be deductible if they have a business purpose.

Why you're doing the meal, but they're only deductible 50% in most cases.

Travel things.

So if you're, you know, taking public transportation or an Uber to get to a client site, that may be deductible to you, again, if you're not an employee.

>> I'm going to stay on the theme here.

Norm Peterson used to tell Sam Malone on Cheers that he wasn't writing off enough, and that he was going to be a very aggressive accountant.

Do you think people who work from home, do you think people who are self-employed do not write off enough of their expenses?

Do you think people are missing opportunities for that?

>> I think I think a lot of people are not aware of what they can deduct.

I mean, their cell phone, for example, their internet, all of those things can be deductible for to the extent they're used for business use.

So yeah, I mean, typically when someone is self-employed, we look over if we're just bringing on a new client, we look at that and, you know, we'll say, well, do you use this?

Do you have this cell phone, internet?

You know, how much of your home is home office?

And I think a lot of people I would say there's we've got two buckets.

The people that aren't aware of all the deductions and the ones that want to write off their trip to Aspen for skiing because they had they had a meeting there.

>> okay.

>> So two extremes.

Yeah.

So find the middle ground.

But is it valuable just to ask your professional questions about this?

Do you walk people through this kind of stuff?

>> Yeah.

>> All the time.

Yeah.

I think one of the big things too, that we often see is that a lot of these require a certain level of documentation that not everybody is.

Yeah.

Wanting to or willing to kind of maintain.

And that's something we talk a lot about with our clients as well.

What kind of documentation do you need to sustain this kind of a deduction?

>> If you put in a new carpet or kind of Reno, a home office, is that right?

Can you write that off if you're self-employed?

>> Sure can.

>> You can.

Yeah.

okay.

Because that's your office space, right?

Yeah.

okay.

See.

So there you go.

so that's we're talking in general, obviously we're going to answer general questions.

It's a great chance to do that if you've got them listeners and we're working through some of your emails already.

but we're also talking about what was in the bill that passed in July and what that means for different areas of the code and how it could affect you.

So we're talking to Kristina Stamatis and Anthony Scinto, who are partners with me and co in Rochester.

Where are you located in Rochester?

>> Rochester, Canandaigua, Elmira and Albany.

>> okay.

And so they're offering their services to help us understand what we should try to get ahead of and start thinking about here.

okay.

So I'm going to go through some other areas that I see in the bill.

And you guys can kind of pick it up and take it.

And I'm going to take Angela's email.

Angela says, I had a baby in March.

Does a child tax credit automatically apply for new parents?

How do we get it?

okay.

Child tax credit.

What does Angela need to know?

>> Child tax credit was made permanent with this bill, which is great.

It was increased to $2,200.

You just have to have a baby at any point during the year.

And once that dependent is listed on your tax return, unless their income is above the phaseout, which oh geez, what's that?

Around half a million now.

>> I think it's yeah, I think it's about.

>> A half close to half a million where the credit starts to phase down.

it'll just flow through automatically and she'll get that credit.

No extra work needed on her end.

Besides entering her baby's information in the tax return and date of birth.

>> okay, but if you don't do that, you're not getting.

>> It correct.

>> okay, so her question is, does it automatically apply for new parents?

No, but it's not a whole lot of work to know.

>> No.

I mean, if she does her own taxes, just enter your baby's name, the birth Social Security number.

Otherwise provide it to her accountant.

>> okay.

Boom.

There you go, Angela, I hope what happened to me doesn't happen to you.

My son, born in July, and they spelled his name wrong on his birth certificate.

That's a fun thing.

That's a that's a fun thing to deal with.

I want to tell you how much I enjoyed that actually, his mother dealt with most of that.

So, we really loved that.

That was fun.

Angela.

Good luck.

child tax credit is permanent now in this bill.

That's right.

okay.

and it's $2,200.

Yes.

So if you are sharing custody of a child, is it a situation where you would alternate with your with parents and who gets to claim it, or do you cut it in half?

>> You do not cut it in half.

>> So it's $2,200 to one household.

Yeah.

And probably rotated if you're a 5050.

>> Custody, most likely.

I mean, divorce decrees are all different, but yet usually that's the case because there's no longer that dependency exemption that we used to have back in the day.

It's now just the child tax credit.

>> okay.

and child tax credit is something listeners probably know.

It's it has been a little bit of a political hot button, but there seems to be some agreement at least you know, during the Biden administration there, I think there were credits that were temporary that lasted maybe a year or two and then were sunsetted.

Yes.

and there were some debate in Congress about either extending those, making those permanent.

Vice President Vance has talked about his desire to see you know, stronger child tax credits.

So there you go.

$2,200.

Supposed to be permanent.

Yeah, pretty easy to claim.

>> So if we want to keep talking about babies in relation to that.

And this is not political.

I didn't name this the Trump accounts.

Are you familiar with those?

>> I've heard about that, but let's talk about that.

>> Yeah.

So each individual who has a U.S.

baby through 2028 is supposed to receive $1,000 from the government as kind of like a startup savings fund for the baby.

And that grows tax deferred until the child reaches age 18, at which point it can be withdrawn for qualified expenditures such as a new home, starting a business or higher education.

there's a lot of guidance anticipated to come out on this because a lot of people are already asking, well, can I convert it into a Roth IRA?

Right?

I mean, that answer is not out there yet, but.

>> Oh, that's interesting.

okay, but let me back up.

Christina, I'm glad you bring this up.

Was that part of the Big Beautiful Bill or is that separate?

>> No, it's part of the beautiful Bill.

We just haven't heard a lot about it, and I honestly, I expected more guidance to come out on that by now, but I guess they have.

>> Well, they're going to have to have more guidance by well before April.

>> Yeah.

>> Especially in the tax season.

Right.

Right.

okay.

So if you had a baby this year you should be eligible for the the what's it called.

What are they calling it.

>> Trump account.

>> The Trump account for your child a thousand bucks.

>> Yes.

>> but you don't know if you can convert it, if you can use it in different.

>> Ways.

And important to note too, when the child does reach age 18 and it's withdrawn, it's taxable.

It's taxable at capital gains rates.

If it's used for qualified expenditures.

So if and the family can actually contribute up to $5,000 a year to this account if they want to, if they want it to grow tax deferred.

But important to note that if your purpose is saving for higher education, 529 is the way to go over the Trump account because the 529 comes out completely tax free if used for qualified higher education.

>> Reiterated.

>> I just.

>> No, no no no.

>> I get a little excited over tax sometimes.

>> Back it up to 529.

Reiterate that point again.

I want to hear that again.

>> Yeah.

So the point is if your intention if the family's intention in contributing to an account to a tax deferred account, either the Trump account or the 529 account is to save for higher education.

The 529 account is the way to go because the money comes out of that account tax free, where the money out of the Trump account comes out taxable, it grows tax deferred.

But in the end you have to pay tax on the Trump.

>> And actually sticking with 529 plans for a second.

This wasn't part of the one Big Beautiful Bill act, but it was part of secure 2.0 act which came out, I think, in 2022.

If I'm not mistaken.

the 529 plans, it used to be you'd save for your child, they'd use the funds as qualified expenses for tuition, education related expenses.

Yeah.

If you got to a point where your child got through their education and there was still a balance there, they would have to essentially leave it in the account until they retired.

It was a long term deferred account.

There's an ability now through this secure 2.0 act to actually convert those funds to a Roth IRA account, and you can do that.

I think it's up to $35,000 over a lifetime.

And so there's some opportunity for people to have more flexibility with what they can do for those 529 plans, which I think gives them more ability to put money into those accounts without any kind of long term concerns.

>> Yeah, a lot of people do get concerned that they're overfunding the account.

>> Who are these people who will be over?

>> Right.

>> Have you seen the cost of college.

>> People with too much money?

>> okay.

You can over overfunding a five.

I would think that the bigger concern would be if I'm putting money in a 529 and my kid doesn't go to college.

What happens?

And the answer now is, I think what you're saying is it used to be that, well, then it became like a long term retirement account you couldn't touch for a while.

Now there's more flexibility.

>> That's right.

I mean, it's still could be a retirement account in the form of a Roth, but the advantage of a Roth IRA is that it's after tax money, so it'll grow after tax, and it can be taken out after tax.

And it can be accessed by that individual for various reasons prior to retirement age.

So buying a house, for example.

>> And just reading an article on 529 here, I always think of 529 as just college or university expenses.

the act expands permitted uses of funds in 529 plans can now cover expenses related to elementary, secondary, higher ed and post-secondary credentialing expenses.

Private, public or religious, elementary or secondary schools.

>> That's correct.

>> So you can use 529 in more flexible ways.

>> Exactly.

>> okay.

At a different level.

So expanded use their 529.

Good to know.

and I'm just kidding.

If you've overfunded your 529 congratulations.

That's amazing.

That's no that's awesome.

>> And as a brief reminder too, for our our New York residents, to the extent that you contribute, up to 529 plans for your children, you can deduct up to 5000 per taxpayer.

So up to 10,000 for a married filing joint couple on your New York return.

>> I will also just say the 529 if you hear if you hear about the the so-called Trump account, that's not the same thing.

529 and the Trump account are different.

Trump account is going to be taxable.

529 not but you're supposed to get a thousand bucks in that account for a newborn born this year or next year or in future years.

I, I always think it's hilarious when politicians want to put their names on it.

Like, that's a Trump account came directly from the from the president.

That's so nice of him.

and that is not a political statement.

I was talking to my my uncle recently.

He was a New York State Assembly member back in the early 1980s.

And he said you would just not he's a Democrat.

He said you would not believe the people in his party who just they were just in it to get the fire hall, their name on a fire hall, their name on a little league.

Like he just found that detestable.

It's it goes a lot of different directions.

But hey, that's what politicians do.

We're talking to guests who are helping us wade through the tax code, your taxes, understanding what could be changing.

And they're here from me and co partners.

Anthony Scinto Kristina Stamatis are with us.

And I'll.

And our second half hour I'll work through more of your emails.

I want to get to a couple more things that were on my list here.

And then we can kind of go back to, to listeners here.

So there was a temporary senior bonus deduction.

Do we know what that is?

What is that.

>> Yeah.

So there was a lot of talk leading up to the bill of potentially excluding Social Security from being taxable.

up until now, it's always been taxable.

It's included in somebody's tax base.

They pay tax on Social Security benefits.

ultimately in the bill they didn't exempt Social Security from taxation.

But what they did do is provide up to $6,000 deduction for seniors.

So if you're a senior you can take up to a $6,000 deduction.

Now.

And there is some phase outs.

But they're pretty generous phase outs overall.

>> looking at some of the details, 6000 per taxpayer, 12,000 for a joint return.

Right.

So that's right.

So you can double it there.

and then looking at the phase out disappears at $175,000 for singles, 250 for joint filers.

That's I mean, that's not a huge probably percentage of seniors, right?

>> Right.

Exactly.

>> Of income.

and the bonus applies only to returns from 2025 to 2028. and then I guess it would sunset at that point, correct?

>> Yep.

And it's, it's for those who are 65 years and older.

>> okay.

65 and older.

and then just a standard deduction in general, a bigger standard deduction here.

That's right.

okay.

You want to hit that Christina.

>> Yeah.

30. married filing joint is 31,500, I believe.

which is an increase.

So the standard deductions that were increased back in 2018 have been made permanent.

But as I said earlier, with the increased salt cap, many people will be itemizing, especially if they're a homeowner in New York state.

>> okay.

there's a lot of language in this part of the portion.

I have no idea what this any of this means.

So I'm just going to move on from that part here.

And we're going to take our only break, and I'll come back and get some some of your questions for our guests here.

I also want to circle back to some of what we talked about at the outset here.

If you own a business, what does this mean for your ability to maybe more aggressively invest?

And what does this bill do in that way?

So we'll talk about that and answer more of your questions with Anthony Scinto Kristina Stamatis partners from MHB and Co talking about your taxes.

That's next.

I'm Evan Dawson Thursday on the next Connections, we welcome a group who spend a lot of time in the 1980s protesting against the possibility of nuclear war when people were doing drills, students were hiding under desks and the thought of nuclear war was on everyone's mind.

Now there are more nuclear powers and more nuclear weapons, and yet we don't see those demonstrations as much.

Why is that?

We'll talk about it on Thursday.

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Nature trails to explore and more.

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>> This is Connections.

Some of you are sending me really detailed emails about your struggles with, custody and who claims what.

I can't adjudicate all of this for you.

I can't, I'm going to try to help.

but there are some, I think some some good general questions.

And I'll take this one from Patrick.

he says, let's say somebody missed the tax credit.

Hypothetically, is there a retroactive means that can be taken with an accountant or by oneself to receive that money?

I deferred my taxes just in case this happened.

And sounds like I'm the one who's going to be claiming it before October 15th.

But Patrick is wondering if if somebody misses it, can you retroactively claim it, or is there the deadline?

A firm one.

>> Go ahead.

>> Yeah.

So if you haven't filed your return yet, then you can still you can still file the return and claim the credit.

If you have filed your return.

There are typically ways that you can go back.

And what we would call amend that return to claim that benefit.

I would absolutely talk about your specific facts and circumstances with a CPA, just to make sure that yours line up with your ability to do that.

But in general, most of the time you can go back and amend a tax return.

>> okay.

>> Yeah, I agree, I'll jump in on the divorce angle because I don't know if that's what he's referring to or not.

If the ex has claimed the credit, you're up for a battle, right?

Then.

Then you've got to submit divorce decree to IRS and it gets really involved.

>> So and you've probably seen some of that.

Yes.

Yeah.

>> And if you don't know whether your ex has claimed the credit or not, it gets a little bit tricky.

And you may you may need to call your attorneys again and have that interplay in that conversation.

>> All right.

Follow up from Patrick.

He says do you work with LLCs.

Do you work with 1099 contractors?

I recently had been contracted by New York State regarding the non submittal of sales tax with respect to alleged property gains.

it's very confusing because I've paid sales tax on everything that I've purchased and implemented into my garden installations for other people.

Is this in your expertise?

>> It is.

We don't like sales tax audits, though.

>> Why is that?

>> Because they're brutal.

The sales tax auditors are so detailed.

So it sounds like he's going through a sales tax audit.

And it's just like there's so many nuances to sales tax law.

You know, for example, I think and I hope this is still the case where a car wash, if you pay cash, it's not subject to sales tax.

But if you use a credit card and go through a tunnel, then it's subject to sales tax.

And I don't know how business owners are expected to know all of these small nuances and details.

It's just difficult.

>> Did you say.

>> Did you say go through a tunnel?

>> Yeah.

You know how there's those different types of car washes?

I hope that's still the law.

It was a few years ago.

>> Why would there be a. differentiation of the law over this?

>> I have no idea.

It's baffling.

>> We need more.

>> Law.

>> That's what we need.

We need, we need, we need.

So.

But Patrick maybe can call.

>> You.

>> Sure.

>> And they'll find someone else to send.

>> Patrick often.

Patrick.

>> Good luck.

Man.

In all seriousness, I know that can be a pain.

nobody loves to deal with that.

It's hard.

And I wish you well, because it's especially confusing when you feel like you've done everything and you've been really buttoned up, and then all of a sudden, you're digging back through your records, and I know that can be a pain.

Good luck to you.

Thank you for the email there.

let's get back to to your business investment.

And one of our guests, Anthony Scinto, said at the top of the hour that one of the headlines coming out of the passage of the one Big Beautiful Bill Act in July is Business Investment and and how that how this might relate to what businesses can do.

Take us through some of that.

>> Yeah, sure.

So back in 20 1718, when we had the Tax Cuts and Jobs Act that law put in place a temporary increase of people's ability to take depreciation on brand new equipment that they might buy in the year that it's purchased.

So this is a deduction against income.

So if they purchased a piece of equipment in a given year they could fully deduct it against their income and reduce their tax liability in that year.

That has been phasing down that ability over the last couple of years.

And it was set to go down to 40% this coming year.

And eventually phase out completely.

The one big, beautiful bill has reset that permanently to 100% bonus depreciation, meaning again, you can completely write off many large capital investment purchases that you have in the year that you make the purchase.

So that's a benefit because instead of spreading it across a long period of time as a depreciation expense, you're just writing it off automatically in the year that you're investing.

so so that's that's a huge benefit that's being made permanent.

And I would also say one area where this can have some interplay is the way in which you're funding your investments.

So for for businesses who are relying heavily on credit, for example, they may also have interest expense.

And there's another provision in the bill in this bill that has made deducting interest expense easier.

for the last couple of years, we have not been able to add back depreciation and amortization to calculate what our interest limitation was.

And that was actually causing a lot of problems for people, especially people who were highly levered and using credit to buy new equipment.

So between not being able to deduct the full amount of an expense and not being able to deduct the interest expense that you're accumulating, it was really capturing a lot of businesses and increasing their tax bill.

Now, both of those things are reversing back to what they were at the start of 2018 with the Tax Cuts and Jobs Act.

So you can expense many fixed assets that you might place in business.

So furniture, fixtures, equipment and the interest expense ability will be heightened.

Now that you can also add back depreciation and amortization in the calculation of that limitation baseline.

So what will this really do at the end of the day?

What I'm saying is businesses that are looking to grow and invest have an opportunity here to not only do so confidently knowing that they can expense those investments immediately in the year that's incurred.

But they also have the ability and flexibility to do that through credit, where maybe in years past they were actually paying tax on the interest expense that they were paying on credit lines.

>> okay.

forgive the lay question here.

Does this potentially make you more liquid and give you a chance to expand more aggressively in the short term?

>> Exactly, yes.

So ultimately, these two provisions work together to reduce your tax liability.

So you're saving you're saving a certain amount of tax in the year that you're making that investment, which then allows you to go back and invest that cash somewhere else.

>> Yeah.

The idea being you're not just going to pocket that money.

You can grow more quickly, more aggressively.

>> That's right.

>> Exactly.

okay.

do you think most businesses are aware of this?

>> I don't think that they're aware of the interplay we've been telling our clients that it was hopefully coming, and we've been talking to them quite a bit about their planning.

And actually, this is really the important thing.

Accounting firms like us before the one big Beautiful Bill act was formally passed, we had some sense of where the provisions might end up going.

But what we knew for sure was that if nothing was passed, some of these provisions would expire.

So the ability to fully deduct an investment in a capital asset was going to go away.

So because we didn't have that certainty prior to the enactment, we were advising a lot of our clients to invest back last year, in the years before, because we weren't sure if they were going to get the same investment opportunities going forward.

So now that's changed.

And so we're going back to our clients and having a lot of conversations about their growth plans and their investment plans, and maybe changing those.

>> All right.

so again, listeners, if you've got questions, if you want to talk to us from the business side of things related to what Anthony was just telling us, you can call the program toll free, 844295 talk.

Or you can jump.

I'm going to read some of your YouTube comments and a lot of emails today as well.

Connections at wxxi.org.

You can join the chat on YouTube.

So a lot of ways to get in touch with us.

Anthony Scinto Kristina Stamatis.

here from mWBE and Co.

so let me read some of the comments that have come in.

here's one on YouTube.

Jan on YouTube says I'm on Medicare and I have a workman's comp case pending.

I had many expenses for my medical condition that were not covered by workman's comp.

Can I claim these expenses as deductions?

>> Short answer is yes.

If there's always the if the medical expenses have to exceed 7.5% of her adjusted gross income to in order to start to be deductible.

In addition to that, you need to itemize.

So if you're taking the standard deduction, you won't get the benefit of those medical expense deductions.

If you itemize and the expenses are such that they exceed 7.5% of her total income, then yes, they will be deductible.

>> okay.

So we're going to go back to real one on one stuff, because a separate note came from Bob in Rochester that said, wait, what?

What is the standard deduction.

So here we go guys.

What's a standard deduction.

>> So everybody gets a deduction off of their income.

You either take the itemized deduction or the standard deduction.

The greater of the two.

So if you don't own a home you don't have a mortgage.

So there's no mortgage interest.

You're most likely going to take the standard deduction which for married filing joint is 31,500 this year.

If you own a home and you have high property taxes and you have a mortgage interest and charitable contributions, you will most likely itemize.

okay.

Is that good?

>> Yeah, I think so.

And so for for Jan, I imagine if Jan's going through a situation like this, that her expenses would exceed that seven and a half.

>> It sounds like.

sounds like it, it sounds like it.

It also sounds as though she's going to be getting some workers comp money, too, which would be used to offset those expenses.

So she may not be able to claim all of those.

>> okay, Jan, if that answers your question, I hope it does.

But if there's anything more you need, send us a note in chat.

Good luck to you again.

I know that can be a headache.

Boy do I know medical bills and what's covered by insurance.

You know what becomes you know possible for deduction.

I mean, it just it can be the worst.

So I, I wish you well there I hope you I hope you're doing well.

and you can you can call us if you like.

Here.

Like.

Monty, I'm going to get Monty on the phone next in Rochester.

Monty's got a question about taxes for an inherited IRA.

Go ahead.

Monty.

>> Hi.

Yeah, I have the inherited IRA, and I wondered if there were any changes regarding filing it this year.

>> I'm not aware of any changes.

when did you inherit the IRA?

>> about 20 years ago.

>> okay, okay.

So there.

So what's important to note about that?

So then what's good about you getting it so long ago is that you have to take the distributions over your lifetime, which I'm sure you're aware was it secure 2.0 that changed it to ten years.

>> Yep.

>> That's right.

Yeah.

So the secure 2.0 act changed.

the the lifetime of distributions from the recipient's expectancy, life expectancy to ten years, which accelerates a lot of income tax for several individuals.

But as far as the, as part of the one big beautiful bill, there haven't been any changes to inherited IRAs.

>> okay.

>> And because you inherited yours 20 years ago, those changes would not have impacted you with the secure 2.0 act.

>> Oh, okay.

All righty.

Thank you very much.

>> Good luck.

Money.

Maybe.

Related to that, Claire wanted to know if there are any change to penalties for dipping into retirement funds.

>> I'm not aware of any.

>> No.

>> Not in this bill.

>> No.

>> okay, so if you want to dip into your retirement funds, that seems to be where Claire's going.

What does that mean for you?

>> What happens.

>> If you're not qualified?

If it's not for a qualified expenditure, there's certain hardships.

And I don't remember them all.

Off the top of my head.

There are certain exceptions that you can go in and take a distribution from your retirement.

If you're under age 59.5. in that case, a 10% penalty would not apply.

But if you just need the money to pay off some credit card debt or something like that, you're going to pay a 10% penalty on early withdrawals.

>> As well as the tax that you would be paying on the income anyway.

Yeah.

So back to your question or your comments earlier.

Right.

So if you're in a 20% tax bracket without having to consider the income from this IRA, for example, or 401(k), you're going to pay 20% of tax on the withdrawal from that retirement account, plus the 10% penalty.

>> So if you withdraw $5,000, it is a $1,000 tax bill for you.

That's 20%.

And a $500 penalty for withdrawing early.

>> Exactly.

>> That's right.

Yeah.

>> So you're only netting 3500, right.

>> It's I would say that's always the last resort.

I mean certainly.

>> Try not.

>> To do it.

Try not to do it.

Yeah.

Of course there's always emergencies and circumstances.

But you know, if you are able to finance some a short term loan from a bank, that's.

I would much rather see taxpayers do that.

>> Well, and actually, to that point and it really depends on the specific deferred account that you have, if you're able to take a loan against your retirement account, I would recommend that if you really need the money, a lot of these plans will allow you to essentially loan yourself the money.

You don't incur a penalty, you don't incur the tax, and you pay yourself back with interest.

So the money that you end up paying back to the account just goes right back into your account.

Over time.

>> I'm going to ask an embarrassing question.

I should know this.

So if you wait to 59.5 and then you want to withdraw funds from retirement, there's no penalty.

Is it taxable income?

>> If it's a tax deferred account, like a traditional IRA or a 401(k), then yes, it would be taxable when you withdraw it.

If it's a Roth account, it would not be taxable.

>> Why doesn't everybody just do Roth all the time.

What are we doing here.

>> Well a lot of people want to save on their taxes today.

>> I see.

>> And some people.

>> Save today.

Save tomorrow.

>> Exactly.

Yeah.

>> And if you're making a certain amount of money, you're not able to contribute into a Roth IRA either.

>> okay.

Claire, again, I hope that answers your question.

Let me know if it doesn't separate question for Melissa wants to know how many people and how many businesses get audited every year.

Why are we asking this?

As the first.

>> Question I have.

>> I don't know, but I'm telling you, the service that we've been getting from IRS, which I probably shouldn't be saying this now they're going to come out of my clients.

>> Come on.

>> It's just it's getting worse.

Well, you know, they've laid off so many people.

They're just not appropriately staffed.

So I think we're going to see fewer audits than we had in the past.

>> Yeah, it depends on the rates of audit.

And I don't remember this specific ones.

I only remember one.

they vary depending on the tax type.

So individuals have a different audit rate than partnerships compared to C corporations.

So they're all a little bit different.

partnerships for example, have the lowest traditional rate of audit.

I think the last number I saw at a conference recently was something like less than 1% of partnerships are audited in any given year.

>> It's sort of weird saying this on the air.

It feels like Johnny Moneybags.

They're just looking for a reason.

>> To roll the dice.

Exactly.

>> Don't roll.

>> The dice.

Yeah.

>> I don't think that's the smart way to do it.

I don't think our guests do either.

Charlie says even after months of a New York State tax auditor poring over my wife's business records, it was found that she owed absolutely nothing.

This was after she was told she owed over 20 K on sales tax by the state.

The lesson for us save all your receipts and use professional tax accountants.

>> That's from Charlie.

>> Yes.

And it's unfortunate.

it might be a sales tax audit from what he's saying.

Did he say sales tax?

>> I think he.

>> Said sales tax.

Sales tax.

>> And that's unfortunate because those are pretty prevalent.

Those happen quite often.

And the expense that the taxpayers have to incur, you know, in hiring a firm like us to help get them through that audit.

And then in the end, the auditor doesn't find anything.

It's unfortunate, but it's definitely the way to go.

>> And I think it's important to also note that it's not just the IRS that's had challenges with staffing.

It's also down to the state level and local level.

And so what we're finding or what we're seeing is that there are a lot of automatic notices that now get sent out to taxpayers based on certain criteria that the taxing authority sees in their systems.

So you may get notices that really aren't applicable or don't result or shouldn't result in an adjustment to your tax.

but unfortunately, they are automatic.

They do have to be dealt with.

And so I would encourage people to reach out to an accountant or a CPA to help you through that if it comes up.

But we're seeing that as an increased activity by all tax authorities right now.

>> Charlie, by the way, is a real person.

He's not a client of the firm that's represented on the show today.

but unfortunately, they've probably unfortunately, he's not the only one you've probably heard had stories like that.

>> Yeah, yeah.

>> So same thing with Jack.

Jack wants to know what our guests think of TurboTax.

And I'm like, did they cue this question up, too?

But they didn't.

Jack wants to know, what do you guys think of TurboTax?

>> Well, look, in fairness, TurboTax and other tax prep, self tax prep services absolutely have their place in the market.

you know, we wouldn't there's certain clients that really don't necessarily need our assistance.

but I would say that if you have high income, if you have certain complex tax situations, for example, owning a business, inheriting money multiple properties that you own and rent out those types of things, that does add a whole lot of complexity to your tax position.

And that's where you might start to look to a CPA or an accounting firm to help you with your taxes.

But TurboTax and other tax prep services, they're great for quite a number of Americans, you know, especially if you're earning a wage, you don't have a house, you don't have property taxes, you don't have complex situations.

>> It's April 13th.

>> Yeah.

>> You know.

Yeah, exactly.

>> Right.

That's right.

>> That's a fair question though, Jack.

And I do appreciate the answer from our guest here, who is, I think, giving you a nuanced answer.

The question is, how complicated is your tax bill?

how straightforward is it?

So good luck to you, Jack.

before the hour's up, let me hit a couple other points that I think, from what I'm reading, are part of the one Big Beautiful Bill act and maybe could stand some defining for listeners who would wonder.

So amt we hear it a lot.

Alternative minimum tax exemptions or what is the AMT you guys want to define AMT first.

>> Do you want to talk about it?

I don't see it that often anymore okay.

>> Yeah.

We don't see it that much anymore.

>> So what is the AMT.

>> So AMT is alternative minimum tax.

Now there are certain there are certain adjustments that for various reasons Treasury, Congress, the IRS feels are preferential in certain ways and are really meant to benefit lower income individuals.

Those have traditionally been adjustments to get you from your regular tax base to an alternative minimum tax base.

So in general, it was something that affected higher net worth individuals, higher earning individuals.

>> I don't know if you agree with this, Anthony, but I've always called it kind of like a parallel tax system.

>> Absolutely.

Yeah.

>> Yeah.

>> And but we just don't see it that often anymore as something that is impacting at least our clients.

>> Why is that?

>> Because of the law changes and the AMT preference items have changed.

In general.

Just a lot of people that used to be subject to AMT, it used to be very common.

it's just it's just not a big thing anymore for a lot of individuals.

You really have to be really high income and have some significant preference items.

It can get pretty complicated.

>> And from what I'm reading, tell me if I'm wrong here.

This will now really only affect you if you're making as a single filer $500,000 $1 million joint, is that right?

>> Yeah.

And still, it's probably unlikely.

>> okay.

So fair questions about it.

But that's not most Americans.

>> Correct.

>> okay.

and the estate and gift exemptions made permanent here.

So what does that mean.

>> Yeah, that's a great question.

again, kind of going back to the Tax Cuts and Jobs Act.

So this is a through line with the one big beautiful Bill act.

There.

A lot of the provisions that came through the one Big Beautiful Bill act.

We've we've talked a lot of the ones that have been changed today, but a lot of them have just been extended.

So they were going to sunset now because of the one big beautiful bill there made permanent or extended and so when it comes to oh gosh, I lost track.

What are we what's.

>> The topic?

Estate tax.

>> The state and gift tax exemption.

it was increased substantially back in 2018, and it was set to almost be cut in half.

if something wasn't done with the one big act, the higher amount of exemption has now been made permanent.

And so there was a ton of uncertainty for CPAs and our clients around how to plan for that drastic reduction in the exemption.

Thankfully, that's been taken off the table with this being made permanent at the higher levels.

I don't remember the exact number, but I believe the.

15,000,015 million is the.

>> 30 million married.

>> Yes.

Yeah, yeah.

You have.

>> To be pretty well off to worry about estate tax right now.

>> And that is at the federal level.

Right.

So it just as a recap for everybody from a gifting perspective, you can give up to $18,000 per taxpayer, per person receiving the gift.

And that's, that doesn't go against your lifetime exemption.

So really we're only talking about gifts that are in excess of that annual exclusion.

So again, we're talking about some pretty big numbers.

But for those who are in that situation, this is a great time to now have another look back at your estate planning and your generational planning, and revisit that.

>> okay, we've covered a lot of ground here.

And as we close, I just want to ask both of you if you think this bill at least makes the code simpler, or does it make it more complex.

>> I don't think, well, nothing's ever going to make it more simple.

Never will that ever happen.

No.

I mean, we but that's job security, right?

>> That's job security for.

Yeah, yeah.

Headache for us, but.

>> I don't I don't think it really adds any complexities to it.

The new provisions.

>> That are temporary.

Yeah.

Just to change.

>> Yeah.

Nothing really no major changes.

A couple of incentives, but nothing overly sophisticated.

>> You agree with that?

>> Yeah.

Yeah I agree.

I mean I, I don't think unless something drastic happens, we're ever going to see a simplification of the tax code.

I mean, we've heard people talk about a postcard sized tax return.

I don't think I'm going to see that in my lifetime.

But no, I don't I don't think that this does anything drastic one way or the other.

This bill in many ways is an extension of some of the benefits that were enacted back in 2018.

>> And lastly, is it ridiculous that we're talking about this in September, or shouldn't we be not just talking about this in March and April?

>> That's when we.

>> Should talk about it now.

>> Now it's.

planning time.

Exactly right.

>> It's go time.

>> It's go time.

Yeah.

>> Now's the time to look at these things and say, should I be contributing more charitable contributions?

Should I be making a property tax payment by the end of the year instead of waiting until the next year to itemize my deductions for state and.

>> Local accelerate that.

>> Yeah.

Or there's so many other iterations of what those questions could be.

And sitting down and really thinking about that now gives us three months time to figure out what the answer is.

>> Well, our guests have been generous enough.

Can you tell folks where they can contact you if they want to get in touch?

>> Me accounting.com.

>> M.B.

accounting.com is the website.

Yes.

And partners Anthony Scinto and Kristina Stamatis from me and Co.

Thank you for making the time.

I really enjoyed it.

>> Next time next.

>> Time I'll have the sound from from Seinfeld ready to go and.

>> Christina and I will.

>> Really enjoy that.

>> Yeah.

>> Everything's a write off.

No, not everything's a write off.

That's one.

>> Of the lessons.

>> Thanks, guys.

>> Really appreciate.

>> You're welcome.

>> Thank you.

>> From all of us at Connections.

Thank you for listening.

Thank you for watching on YouTube wherever you found us.

Thank you.

Thanks for supporting public media.

We're back with you tomorrow right here.

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