The Retirement Plan Startup Credit (Form 8881) provides a tax credit for small businesses that establish a new qualified retirement plan (401(k), SEP-IRA, SIMPLE IRA, or defined benefit plan). Under SECURE 2.0, businesses with 50 or fewer employees can claim 100% of eligible startup costs up to $5,000/year for the first 3 years — a maximum of $15,000 in total credits.

Eligible startup costs include: plan setup and administration fees, employee education and enrollment costs, and costs to set up payroll integration. The credit covers 100% of these costs for businesses with 50 or fewer employees, and 50% for businesses with 51-100 employees. Businesses with more than 100 employees do not qualify.

Yes — SECURE 2.0 added a $500/year credit for plans that include automatic enrollment features. This credit is available for the first 3 years of the plan and stacks on top of the startup cost credit. A plan with automatic enrollment can generate up to $16,500 in total credits over 3 years ($15,000 startup + $1,500 auto-enrollment).

No — the startup credit is only available for new plans. If you already have a retirement plan and want to add features (like automatic enrollment), you may qualify for the auto-enrollment credit but not the startup cost credit. The plan must be established for the first time to qualify for the startup credit.

The best plan depends on your goals: a Safe Harbor 401(k) avoids discrimination testing and allows maximum contributions for owner-employees; a SIMPLE IRA is easier to administer but has lower contribution limits; a SEP-IRA is easy to set up but requires proportional contributions for all eligible employees. Uncle Kam can model the contribution and tax savings for each option based on your payroll.

The ERC was a refundable payroll tax credit for businesses that retained employees during COVID-19 disruptions in 2020 and 2021. The credit was worth up to $5,000 per employee in 2020 and $21,000 per employee in 2021. The ERC program ended in September 2021, but businesses can still claim credits for 2020 and 2021 by filing amended payroll tax returns (Form 941-X). The statute of limitations for 2020 claims closed April 15, 2024; 2021 claims can still be filed through April 15, 2025.

Yes — after the Consolidated Appropriations Act of 2021, businesses can claim both PPP loan forgiveness and the ERC. However, you cannot use the same wages for both benefits. PPP forgiveness is based on payroll costs; the ERC is based on qualified wages not used for PPP forgiveness. Proper allocation of wages between the two programs is critical to maximizing both benefits.

There are two qualification tests: (1) the revenue decline test — a significant decline in gross receipts compared to the same quarter in 2019 (50% decline for 2020; 20% decline for 2021); or (2) the full or partial suspension test — a government order that fully or partially suspended your business operations due to COVID-19 (capacity restrictions, supply chain disruptions, etc.). You only need to meet one test per quarter.

For 2020: 50% of qualified wages up to $10,000 per employee for the year = maximum $5,000 per employee. For 2021 (Q1-Q3): 70% of qualified wages up to $10,000 per employee per quarter = maximum $21,000 per employee for the year. A business with 10 employees could potentially claim $210,000 in 2021 ERC credits alone.

In September 2023, the IRS announced a moratorium on processing new ERC claims due to concerns about fraudulent claims promoted by aggressive ERC mills. The IRS has since resumed processing but is conducting enhanced scrutiny of all claims. Legitimate businesses with valid ERC claims should work with a qualified tax professional to document their eligibility and file properly. The IRS has also offered a Voluntary Disclosure Program for businesses that received improper ERC payments.

A net operating loss occurs when your allowable tax deductions exceed your taxable income for the year. The excess loss can be carried forward to future tax years to offset up to 80% of taxable income in each future year. NOLs generated after 2017 can be carried forward indefinitely.

Under current law, most NOLs generated after 2017 cannot be carried back — they can only be carried forward. However, farming losses and certain insurance company losses are exceptions. During COVID (2020-2021), special 5-year carryback rules applied.

NOL carryforwards can offset up to 80% of taxable income in any given year. This means if you have $500,000 in taxable income, an NOL can reduce it to no less than $100,000 in that year. The remaining NOL continues to carry forward.

Yes — and this is a legitimate tax planning strategy. By timing large deductions (bonus depreciation, Section 179, cost segregation) in a high-income year, a business can intentionally generate an NOL that offsets income in future years when the business is more profitable.

NOL carryforwards generally do not transfer to the buyer in an asset sale. In a stock sale, the NOLs remain with the corporation but are subject to severe limitations under IRC §382 if there is a change in ownership of more than 50%. Proper planning before a sale is essential to preserve the value of NOL carryforwards.

A Donor-Advised Fund (DAF) is a charitable giving account sponsored by a public charity (such as Fidelity Charitable or Schwab Charitable). You contribute cash, securities, or other assets to the DAF, receive an immediate tax deduction for the full contribution, and then recommend grants to qualified charities over time. The assets grow tax-free inside the DAF until distributed.

Cash contributions to a DAF are deductible up to 60% of AGI. Contributions of appreciated securities are deductible at fair market value up to 30% of AGI. Excess contributions carry forward for up to 5 years. Unlike private foundations, DAFs have no minimum distribution requirement.

Bunching means contributing multiple years of planned charitable giving into a DAF in a single year to exceed the standard deduction threshold and itemize. For example, instead of donating $10,000/year for 5 years (which may not exceed the standard deduction), you contribute $50,000 in Year 1 to a DAF, take the full itemized deduction, and then distribute $10,000/year to charities from the DAF over the following 5 years.

Yes — and this is one of the most powerful aspects of a DAF. You can contribute long-term appreciated stock directly to the DAF, deduct the full fair market value (up to 30% of AGI), and avoid paying capital gains tax on the appreciation. The DAF can then sell the stock tax-free and invest the proceeds for future charitable distributions.

A DAF is simpler and cheaper to establish (no legal fees, no IRS approval), has no minimum distribution requirement, offers higher deduction limits, and provides anonymity for grants. A private foundation offers more control (you can hire family members, make program-related investments, and set your own grant criteria) but requires 5% annual distributions, has lower deduction limits, and faces excise taxes on investment income.

For a charitable contribution of appreciated stock, the fair market value (FMV) is generally the average of the high and low selling prices on the date of the contribution. This valuation method is outlined in IRS Publication 561, 'Determining the Value of Donated Property.' If the stock is traded on an exchange, this information is readily available. For closely held stock, a qualified appraisal may be required, especially for donations exceeding $5,000, as per Treasury Regulation §1.170A-13. Accurate valuation is crucial for maximizing your deduction and avoiding IRS scrutiny.

Yes, strict record-keeping is essential for a charitable contribution of appreciated stock. For donations valued at $250 or more, you must obtain a contemporaneous written acknowledgment from the charity stating the amount of cash and a description (but not value) of any property contributed, and whether the organization provided any goods or services in return, as per IRS Publication 526. For noncash contributions exceeding $500, you must file Form 8283, 'Noncash Charitable Contributions.' If the stock's value exceeds $5,000, a qualified appraisal is generally required, and a summary of the appraisal must be attached to Form 8283, as detailed in Treasury Regulation §1.170A-13.

If you donate appreciated stock held for less than one year, it is considered short-term capital gain property. In this scenario, your charitable contribution deduction is limited to your cost basis in the stock, rather than its fair market value, as outlined in IRS Publication 526. This means you would not avoid capital gains tax on the appreciation. To receive a deduction for the full fair market value and avoid capital gains tax on the appreciation, the stock must be considered long-term capital gain property, meaning you must have held it for more than one year before the donation date. This distinction is critical for maximizing the tax benefits of a charitable contribution of appreciated stock.

Yes, a charitable contribution of appreciated stock can be made to a Donor-Advised Fund (DAF), and it offers significant tax advantages. Donating appreciated stock to a DAF allows you to claim an immediate tax deduction for the fair market value of the stock, provided it's long-term capital gain property, and avoid capital gains tax on the appreciation, similar to direct donations to public charities. The DAF then sells the stock, and the proceeds grow tax-free. You can recommend grants from the DAF to qualified charities over time. This strategy is particularly useful for those who want to receive an immediate tax deduction but prefer to decide on specific grant recipients later, as per IRS Publication 526 and regulations governing DAFs.

Yes. You can donate long-term appreciated stock (held more than 1 year) directly to a qualified charity or Donor-Advised Fund and deduct the full fair market value on the date of the gift — up to 30% of AGI. You also avoid paying capital gains tax on the appreciation. This is almost always more tax-efficient than selling the stock and donating cash.

When you donate appreciated stock, you get two tax benefits: (1) a charitable deduction for the full fair market value, and (2) you avoid capital gains tax on the appreciation. When you donate cash, you only get the charitable deduction. For stock with large embedded gains, the difference can be tens of thousands of dollars.

You can donate publicly traded stocks, mutual funds, ETFs, bonds, real estate, private company stock, cryptocurrency, and other appreciated assets. The deduction rules vary by asset type: publicly traded securities are deductible at fair market value; private company stock and real estate require a qualified appraisal; cryptocurrency is treated like property.

Contributions of long-term appreciated capital gain property to public charities are deductible up to 30% of AGI. Contributions to private foundations are limited to 20% of AGI. Excess contributions carry forward for up to 5 years. Cash donations to public charities are deductible up to 60% of AGI.

Yes. The IRS treats cryptocurrency as property, so donating appreciated crypto directly to a qualified charity or DAF allows you to deduct the fair market value and avoid capital gains tax on the appreciation — the same as donating appreciated stock. The charity or DAF can then sell the crypto tax-free.

Tax-loss harvesting is the practice of selling investments at a loss to offset capital gains from other investments, reducing your overall tax liability. The harvested losses first offset capital gains dollar-for-dollar. If losses exceed gains, up to $3,000 of excess losses can offset ordinary income per year. Remaining losses carry forward indefinitely to future years.

The wash-sale rule disallows a loss deduction if you buy the same or "substantially identical" security within 30 days before or after the sale. To avoid triggering the rule, you can immediately reinvest in a similar but not identical security (e.g., sell a Vanguard S&P 500 ETF and buy a Fidelity S&P 500 ETF), wait 31 days before repurchasing, or use the loss to rebalance your portfolio.

No — losses in tax-deferred accounts (IRA, 401(k)) cannot be harvested because all gains and losses inside those accounts are tax-deferred. Tax-loss harvesting only applies to taxable brokerage accounts. This is one reason why it can be beneficial to hold more volatile assets in taxable accounts where losses can be harvested.

Yes — and cryptocurrency has a significant advantage: the wash-sale rule does not currently apply to crypto (it applies only to "securities" under the tax code, and crypto is classified as property). This means you can sell crypto at a loss, immediately repurchase the same coin, and still claim the loss deduction. This may change with future legislation.

Capital losses first offset capital gains of the same type (short-term losses offset short-term gains; long-term losses offset long-term gains). Excess losses can offset gains of the other type. After offsetting all capital gains, up to $3,000 of net capital losses can offset ordinary income per year. Remaining losses carry forward indefinitely.

Crypto tax loss harvesting involves selling cryptocurrency at a loss to offset capital gains and, potentially, a limited amount of ordinary income. For the 2026 tax year, you can use these realized losses to first offset any capital gains from other crypto sales or investments. If your capital losses exceed your capital gains, you can then deduct up to $3,000 of the remaining loss against your ordinary income, as per IRS Publication 550. Any losses beyond this $3,000 limit can be carried forward indefinitely to offset future capital gains and ordinary income, providing a valuable long-term tax planning tool.

When performing crypto tax loss harvesting, the maximum amount you can deduct against your ordinary income in a single tax year is $3,000. This limit applies after you have used your capital losses to offset all your capital gains. This rule is consistent with the treatment of capital losses from other investments, as outlined in IRS Publication 550. Any losses exceeding this $3,000 threshold can be carried forward to subsequent tax years, allowing you to utilize them against future capital gains and ordinary income until they are fully depleted.

Yes, you can perform crypto tax loss harvesting multiple times within the same tax year. There are no IRS restrictions preventing you from realizing losses throughout the year as market conditions change. This flexibility allows you to strategically manage your portfolio and optimize your tax position. However, it's crucial to accurately track all your transactions and ensure proper cost basis accounting for each sale to avoid errors when preparing your tax return, as detailed in IRS Notice 2014-21 regarding virtual currency.

Unused crypto tax loss harvesting deductions, specifically those exceeding the $3,000 annual limit against ordinary income, can be carried forward indefinitely to future tax years. This means you don't lose the benefit of these losses; you can apply them to offset capital gains and up to $3,000 of ordinary income in subsequent years. This carryforward provision, consistent with IRS Publication 550, is a significant advantage of tax loss harvesting, allowing you to mitigate future tax liabilities even if you don't have sufficient gains or ordinary income in the current year.

Yes, when performing crypto tax loss harvesting, you must report all your cryptocurrency sales, including those at a loss, on IRS Form 8949, Sales and Other Dispositions of Capital Assets. The totals from Form 8949 are then transferred to Schedule D, Capital Gains and Losses, where your net capital gain or loss is calculated. It is essential to accurately record the date of acquisition, date of sale, cost basis, and sales price for each transaction. Maintaining detailed records is crucial for substantiating your reported losses if questioned by the IRS, as emphasized in IRS Notice 2014-21.