Trump has made it clear that he would aim to make the TCJA’s tax cuts permanent. His proposals focus on maintaining lower tax rates, with particular emphasis on corporate and business-friendly policies. Key components of his tax agenda include:

• Tariffs in Lieu of Income Tax Hikes: One of the cornerstones of Trump’s plans to increase revenue outside of the income tax system is to implement tariffs on imported goods. Proposals include a 10%-20% tariff on imports from most countries and a 60% tariff on Chinese goods
• Extending TCJA Provisions: Trump has expressed the desire to extend or make permanent the TCJA’s tax cuts, particularly for individuals and pass-through businesses. While extending most provisions, he has recently promised to lift the $10,000 SALT cap deduction
• Lower Corporate Tax Rates: Trump’s administration has floated the idea of reducing the corporate tax rate even further, from the current 21% to 15% for companies that are producing domestic goods.
• Middle-Class Tax Cut: In his previous campaigns, Trump promised a 10% middle-class tax cut. Though this wasn’t achieved in his first term, it’s likely to reemerge as a key promise. In addition, Trump has introduced “No Tax on Tips” and “No Tax on Overtime” as additional middle class tax provisions
• No Tax on Social Security: Trump has more recently committed to eliminating all tax on social security income. Currently it is estimated that about 50% of social security recipients are paying taxes on those benefits

Trump’s policies are focused on extending the current low taxes on individuals while expanding tax relief for businesses who produce domestically, which he argues will boost economic growth and keep jobs here in the United States.

What is a Reporting Entity?

• Any entity that had to file documents with a Secretary of State for formation (Corporations, LLCs, Foreign companies filing to do business in the US, Limited Liability Partnerships, Limited Partnerships, Professional LLCs (PLLCs) or Business Trusts)
• General Partnerships and sole proprietors are excluded (Granted they are not formed as LLC’s)  
• Inactive entities are excluded if they meet the following criteria:
  • The entity was in existence on or before January 1, 2020
  • The entity is not engaged in active business
  • The entity is not owned by a foreign person, whether directly or indirectly, wholly or partially
  • The entity has not experienced any change in ownership in the preceding twelve-month period
  • The entity has not sent or received any funds of more than $1,000 in the prior 12-month period
  • The entity does not otherwise hold any kind or type of assets, in the United States or abroad, including any ownership interest in any corporation, limited liability company, or other entity

Who is a Beneficial Owner?

• Any individual that directly or indirectly exercises substantial control over the reporting company (see guide for details)
• Any individual that has more than 25% or more of ownership interest in the reporting company

What is the time frame to report?

• Existing companies (formed with the state prior to 1/1/2024) have 1 full calendar year to report (before 1/1/2025)
• Newly formed companies in 2024- 90 days to report
• Newly formed companies after 1/1/2025- 30 days to report

What are the penalties for failure to report?

• $591/day fine beginning 1/1/2025
• $10,000 civil penalty
• 2 years imprisonment (for willful noncompliance)
• Existing New York State LLC owners also need to file a BOI form with the New York Department of State by 1/1/2026 or face an additional $250 penalty (30 days for newly formed companies)

Where do clients go to file the BOI?

• BOI E-FILING (fincen.gov)

• Maximize 401(k) deferrals for the current year
• Utilize Executive Compensation options, HSA, FSA and childcare deferral accounts for future years
• Take advantage of employer matching on 401(k)/HSA accounts
• Meet with accountant to evaluate year-to-date capital gains/income numbers
• Review feasibility for a Roth Conversion
• Explore other tax advantaged accounts (SEP, Traditional IRA, SIMPLE IRA)
• Consider a qualified charitable deduction (QCD) strategy to reduce required minimum distribution (RMD) income
• Utilize charitable deductions and bunching deductions with a donor advised fund on high income years
• Conduct tax loss harvesting
• Don’t forget 529 accounts if you live in a taxable state (maximizing state tax benefit)
• Utilize annual tax-free gifting to reduce your assets and avoid estate tax implications
• Utilize IRA distributions (when feasible) to take care of estimated payment shortfalls and avoid underpayment penalties

One 5-year rule pertains to contributions and the other pertains to conversions.

Contributions you make to a Roth IRA can be withdrawn at any time or age, tax- and penalty-free, since you already paid taxes on those funds when making the initial contribution. However, if you make a withdrawal before age 59 ½, including earnings on your contributions, you may face taxes or a penalty unless you meet certain criteria to create a “qualified” distribution. One such criteria is the 5-year rule which requires waiting five years from the first day of the tax year which you made your first contribution before you can withdraw any earnings from your account without penalty. For example, if you made your first contribution for the 2022 tax year on April 18, 2023, you must wait until January 1, 2027, before you can withdraw any earnings without incurring an additional 10% penalty. Additionally, if you use the funds for qualified expenses, such as a first-time home purchase, qualified education expenses, and medical expenses, you may be able to avoid the penalty – but not taxes – on the earnings if younger than 59 ½. It’s also important to note that the 5-year clock does not restart with each additional contribution and only applies to the first contribution of the account, creating an incentive for everyone to open and contribute (even just $1!) to a Roth IRA as soon as possible.

If you convert traditional IRA assets to a Roth IRA, you may be subject to a completely different 5-year rule for withdrawals. You must wait five calendar years from the year of your conversion to withdraw any earnings on those converted assets without penalty. So, whether you complete a conversion on January 1 or December 31 of this year, you still must wait until January 1, 2028. If you withdraw your earnings before the five-year period is up, you may be subject to a 10% penalty, in addition to any applicable taxes. Similar to the contribution rule, you can withdraw your converted funds at any time without penalty or taxes, as you have already paid taxes on those funds when you made the conversion. However, unlike contributions, each conversion starts a new 5-year clock for those converted funds. Taking advantage of Roth conversions early in your career can steer you clear of incurring additional penalties on portfolio gains, allowing you to take advantage of the tax-free growth of the Roth account. Furthermore, for those looking to enjoy an early retirement before 59 ½ with Roth assets, employing a Roth conversion ladder strategy, where you convert a certain amount over several years, can help avoid penalties.

If your capital losses exceed your capital gains, as an individual you can carry forward the losses indefinitely into future tax years. Also, it is noteworthy to know that capital losses can also offset $3,000 of ordinary income annually.

For a dividend to be qualified, and treated at more preferential tax rates, there must be two factors: 1. The dividend must have been paid by a US Corporation or a qualified Foreign Corporation and 2. The investor must have adhered to a minimum holding period. One key factor is the holding period before the ex-dividend date. For common stock, the investor must hold the shares for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date. While a portfolio containing mostly publicly traded stocks will likely generate primarily qualified dividends over time, dividends from REITs, master limited partnerships (MLPs), employee stock options, and tax-exempt companies are generally not qualified. The classification of qualified vs non-qualified dividends is indicated in your 1099-Div issued by your broker each year.