The knowledge you need

Depending on your location, the end of the year can mean construction season is winding down. At the very least, construction company owners may be planning for a new year of projects, including staffing needs, technology upgrades, and new equipment investments. In work that can feel never-ending, it’s easy for important year-end planning to be deferred until later to address the daily issues that often arise. In the closing weeks of the year there are several tax planning opportunities including deductions and credits, the QBI deduction, and tax efficient investment strategies to consider.

As the end of 2024 approaches, now is the time for individuals to fine-tune their financial strategies and explore opportunities for tax efficiency. From maximizing retirement contributions to tax loss harvesting and AMT considerations, understanding these strategies can help reduce tax liabilities and establish a foundation for future financial health.

A recent analysis by Abernathy Daley 401(k) Consultants suggests that around 80% of companies with more than 100 employees may be overpaying on administrative fees for the defined contribution (DC) retirement plans. This finding, based on a review of over 6,500 Form 5500 filings submitted annually to the Department of Labor and IRS, highlights a widespread issue across industries.

The construction industry appears to be poised for more growth this year. It is expected that demand across most sectors will drive growth except for lodging, retail and private office projects. While growth is certainly welcome it does exacerbate issues such as poor worker training and the overall worker shortage. According to the 2024 Construction Hiring and Business Outlook Survey published by the American General Contractors of America, there are several areas driving workforce concerns. This includes the inability to fill open positions where it was found that 77% of respondents are having a hard time filling open positions.

The Tax Cuts and Jobs Act (TCJA) of 2017 introduced significant changes to the U.S. tax code, offering tax savings, reductions, and other benefits to individuals, businesses, and families. The more popular provisions included an immediate reduction in the business tax rate, a new pass-through entity deduction (Section 199a), Net Operating Loss carrybacks, and changes to the annual estate tax exclusion. However, several of these provisions are scheduled to expire at the end of 2025, creating uncertainty for businesses. As the deadline approaches, it is important to be aware of the changes and how to prepare.

The IRS recently issued Notice 2024-73, providing updated guidance for 403(b) retirement plans regarding the inclusion of long-term, part-time employees. A 403(b) plan is a retirement savings plan typically offered to employees of public schools, tax-exempt organizations, and certain religious institutions. Effective for plan years beginning after December 31, 2024, this guidance requires plan sponsors to expand plan eligibility to include long-term, part-time employees who meet specific criteria. These changes stem from the SECURE 2.0 Act, which introduced reforms aimed at enhancing retirement security for Americans, including part-time workers.

For years hardship distributions have helped participants deal with unexpected downturns that present serious financial challenges.  While these distributions have been available for several years, the SECURE Act 2.0 made important changes that streamline the administration process by allowing plan sponsors to accept participant self-certification. The change reduces the amount of paperwork and compliance hurdles for plan administrators.

The IRS announced yesterday new tax relief measures that extend certain federal tax deadlines until May 1, 2025. This has extended various filing and payment deadlines and applies to all Georgia residents and businesses. The relief applies to income tax returns normally due in March and April. It also covers 2023 individual and corporate returns with valid extensions and estimated quarterly payments.

Millions of U.S. businesses must now comply with Beneficial Ownership Information (BOI) reporting rules, with the deadline set for January 1, 2025. Under the Corporate Transparency Act, businesses are required to submit BOI reports to the Financial Crimes Enforcement Network (FinCEN). The goal is to increase transparency and prevent financial crimes, such as money laundering and terrorism financing. As of August 2024, only 2.7 million of the 32.6 million businesses required to report have done so. These rules mandate businesses to provide detailed ownership information to the federal government.

Recent changes in Tennessee tax law now allow businesses to claim refunds for franchise taxes on previous payments. On May 10, 2024, Public Chapter 950 was signed into law, eliminating the property measure from the franchise tax calculation. Starting January 1, 2024, businesses will calculate franchise taxes based only on net worth, simplifying the process and potentially lowering tax liabilities.