Cummings CPA Services

01/13/2026

Here’s a sampling of some significant tax law changes going into effect this year:

* New charitable contribution deduction for nonitemizers for cash contributions up to $1,000 ($2,000 for married couples filing jointly)
* New 0.5% of adjusted gross income floor on charitable deduction for itemizers
* New 35% benefit limit on itemized deductions for taxpayers in the 37% tax bracket
* Reduced income thresholds at which the alternative minimum tax exemption begins to phase out (and a phaseout rate that’s twice as fast as 2025’s)
* New tax-advantaged Trump accounts to benefit children under age 18
* Increase in tax-free 529 plan withdrawal limit for qualified elementary and secondary school expenses to $20,000 (from $10,000 for 2025)
* New requirement that higher-income taxpayers’ catch-up contributions to employer-sponsored retirement plans must be treated as post-tax Roth contributions
* Elimination of certain energy-efficiency credits for homeowners
* Wider income ranges over which the Section 199A qualified business income (QBI) deduction limitations phase in, potentially allowing larger deductions for some pass-through entity owners.
* New minimum QBI deduction of $400 for taxpayers who materially participate in an active trade or business if they have at least $1,000 of QBI from it

Contact the office to discuss how these or other changes might affect you.

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01/28/2025

Right now, you may be more focused on what you’ll owe (or receive as a refund) when you file your 2024 tax return in April than on tax planning for the new year. However, as you work through your annual tax filing, you should familiarize yourself with amounts that may have changed for 2025 due to inflation adjustments.

Here are four commonly asked questions (and answers) about 2025 tax figures:

1. How much money can I contribute to an IRA? If eligible, you can contribute up to $7,000 to a traditional or Roth IRA (but only up to 100% of your earned income, if less). If you’re age 50 or older, you can make another $1,000 “catch-up” contribution. (These amounts are the same as for 2024.)

2. What’s the maximum I can contribute to a 401(k) plan through my job? The amount you can contribute is up to $23,500 to a 401(k) or 403(b) plan (up from $23,000 in 2024). Those 50 or older can add a $7,500 catch-up contribution (unchanged from 2024). New in 2025, employees ages 60 through 63 can make enhanced catch-up contributions of up to $11,250 (including the $7,500 standard catch-up contribution).

3. How much must I earn not to pay Social Security on my entire salary? The Social Security tax wage base rises to $176,100 (from $168,600 for 2024). You don’t owe Social Security tax on amounts earned above this threshold. (Medicare tax must be paid on all amounts earned.)

4. How much can I give one person without requiring a gift tax return? The annual gift tax exclusion is $19,000 (up from $18,000 in 2024).

These are only some of the tax figures that may apply to you. Contact the office for more information.

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01/11/2025

Tax Season kicks off Monday! Enjoy the snow this weekend and stay safe!

12/19/2024

Wishing all of you a Merry Christmas and Happy New Year!

11/22/2023

10/05/2022

We've moved!
New address is:

2550 Meridian Blvd, STE 200
Franklin, Tennessee 37607

09/11/2022

***A Key Tax Provision of the Inflation Reduction Act of 2022***

***Clean Energy***

Clean Vehicle Tax Credits***

The clean vehicle tax credit was extended through 2032, in addition to a new credit for previously owned clean vehicles. However, for new clean vehicles purchased after August 16, 2022, the tax credit is generally available only if the qualifying vehicle's final assembly occurred in North America (the "final assembly requirement"). To determine whether the vehicle meets the final assembly requirement, taxpayers should enter the vehicle's 17-character vehicle identification number (VIN) into the National Highway Traffic Safety Administration's VIN Decoder tool. They can view the "Plant Information" field identifying where the vehicle was built.

Buyers who entered into a written, binding contract to purchase a qualifying clean vehicle before August 16, 2022, - but did not take possession of the vehicle until on or after that date - should abide by pre-existing rules in effect before August 16, 2022.

Clean Energy Credits for Individuals***

Renamed the energy-efficient home improvement credit, the nonbusiness energy property credit is extended through 2032. It is now equal to 30% of the sum of the amount paid or incurred by the taxpayer for energy-efficient improvements installed during the tax year, the amount of residential energy property expenditures paid or incurred by the taxpayer during the tax year, and the amount paid by the taxpayer for home energy audits.

In prior years, the credit was equal to 10% of the amount paid or incurred for qualified energy-efficiency improvements plus the amount of residential energy property expenditures paid or incurred by the taxpayer during the tax year.
Also renamed (the residential clean energy credit) and extended (through 2034) is the Sec. 25D residential energy-efficient property credit. Furthermore, the new energy-efficient home credit under Sec. 45L has increased dwelling units acquired after December 31, 2022, and the credit extended through 2032.

07/07/2022

Deducting Business-related auto expenses

If you're self-employed and use your car for business, you can deduct certain business-related car expenses. The first thing small business owners need to know is that there are two options for claiming deductions:

Actual Expenses. To use the actual expense method, you need to figure out the actual costs of operating the car for business use. You are allowed to deduct the business-related portion of costs related to gas, oil, repairs, tires, insurance, registration fees, licenses, and depreciation (or lease payments).

Standard Mileage Rate. To use the standard mileage deduction, multiply the standard mileage rate set by the IRS each year by the number of business miles traveled during the year. Normally, there is one set rate for the entire calendar year; however, in 2022, there are two rates: 58.5 cents per mile for the first six months (January through June) and 62 cents per mile for the last six months (July through December). For details, see Standard Mileage Rates Increase for Remainder of 2022, below.

Car expenses such as parking fees and tolls attributable to business use are deducted separately no matter which method you choose.
Which Method Is Better?
Using the standard mileage rate produces a larger deduction for some taxpayers. Others fare better tax-wise by deducting actual expenses. Whether you own or lease your car, you may use either of these methods.

To use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. In subsequent years, you can use the standard mileage rate or actual expenses. If you choose the standard mileage rate and lease a car for business use, you must use the standard mileage rate method for the entire lease period - including renewals.

Opting for the standard mileage rate method allows you to bypass certain limits and restrictions and is simpler; however, it's often less advantageous in dollar terms. Generally, the standard mileage method benefits taxpayers who have less expensive cars or travel many business miles.

The standard mileage rate may understate your costs, especially if you use the car 100 percent (or close to it) for business.

Documentation
Tax law requires that you keep travel expense records and show business versus personal use on your tax return. Furthermore, if you don't keep track of the number of miles driven and the total amount you spent on the car, your tax advisor won't be able to determine which of the two options is more advantageous for you at tax time. It is essential to keep careful records of your travel expenses (if you use the actual expenses method, you must keep receipts) and record your mileage.

You can use a mileage logbook or, if you're tech-savvy, an app on your phone or tablet. Several phone applications (apps) are available to help you track your business expenses, including mileage and billable time. These apps also allow you to create formatted reports that are easy to share with your CPA, EA, or tax preparer.

To simplify your recordkeeping, consider using a separate credit card for business.

Questions?
Don't hesitate to call and find out which deduction method is best for your particular tax situation.

07/04/2022

Happy Independence day!

06/29/2022

HSA Limits Increase Significantly for 2023

Contributions to a Health Savings Account (HSA) are used to pay the account owner's current or future medical expenses, their spouse, and any qualified dependent and are adjusted annually for inflation. For 2023, the annual inflation-adjusted contribution limit for a Health Savings Account (HSA) increases to $$3,850 for individuals with self-only coverage (up $200 from 2022) and $7,750 for family coverage (up $450 from 2022).

To take advantage of an HSA, individuals must be covered by a High Deductible Health Plan (HDHP) and not be covered by other health insurance with the exception of insurance for accidents, disability, dental care, vision care, or long-term care. Medical expenses such as deductibles, copayments, and other amounts (but excluding premiums) must not be reimbursable by insurance or other sources and do not qualify for the medical expense deduction on a federal income tax return.

For the calendar year 2023, a qualifying HDHP must have a deductible of at least $1,500 for self-only coverage or $3,000 for family coverage (up $100 and $200, respectively, from 2022) and must limit annual out-of-pocket expenses of the beneficiary to $7,500 for self-only coverage and $15,000 for family coverage, an increase of $450 and $900, respectively, from 2022. As with contribution limits, deductibles and out-of-pocket expenses are adjusted for inflation annually.

Please call if you have questions about Health Savings Accounts.