Archives for July 2025

Business owners face high stakes when it comes to IRS compliance. One tax mistake can destroy everything. Picture this. You build a thriving career. You close big deals. Then, unpaid taxes send you to prison. This story is real. It involves a Kansas City attorney. At Dana Lee CPA LLC, we break it down. We show you how to stay compliant. We help you minimize taxes legally.

A Respected Attorney’s Downfall: The John C. Carnes Tax Evasion Story

Dive into the details. John C. Carnes practiced law in Independence, Missouri. He handled major deals. For instance, he sold the former Rockwood Golf Course. He also managed the Missouri City Power Plant sale. However, hidden actions doomed him. Carnes evaded taxes from 2012 to 2018. He hid earnings in attorney trust accounts. These accounts protect client funds. They stay separate from personal money. Yet, Carnes misused them.

He withdrew cash. Specifically, he took over $588,000 from two accounts. This happened between 2013 and 2019. He spent it on gambling. He covered personal costs too. Moreover, he deposited $232,000 in fees. These came from big projects. He funneled them into the trusts to hide income.

The IRS caught on and calculated losses of $618,949 for those years. Plus, old debts from the 1990s added up. The total reached $794,540. Furthermore, the IRS tracked him since 2009. They used investigations and enforcement. In November 2024, Carnes pleaded guilty and he got 21 months in prison. He also must pay full restitution. It was a major federal action.

“Creative” accounting turns criminal fast. Prison, fines, and lost reputation follow.

Why This Tax Evasion Nightmare Matters to You as a Business Owner

You juggle many tasks. Growth demands attention. Operations keep you busy. Innovation drives you forward. But taxes lurk in the shadows. They strike hard if ignored. Carnes tried to outsmart the system. His shady tactics failed. As a result, he faced prison. He paid huge fines. His reputation shattered. Does this ring a bell? Many professionals flirt with danger. They use questionable accounting. It blurs lines between smart and illegal.

Reflect now. Are your tax strategies fully legal? Do they withstand IRS compliance scrutiny? Or do you risk a fall? Common errors include misusing accounts. Underreporting income is another. Ignoring old debts invites trouble. The IRS watches closely. Especially after 2025 reforms.

The lesson is clear. Avoid evasion at all costs. Instead, embrace legal strategies. Reduce taxes ethically. At Dana Lee CPA LLC, we guide you. We prevent IRS pitfalls.

How Dana Lee CPA LLC Keeps Your Business IRS-Proof and Tax-Optimized

We do more than crunch numbers at Dana Lee CPA LLC. We partner with you strategically and we master business taxes. Our experience fits your needs. We explore the tax code deeply, we find legal deductions and secure credits. And we apply strategies that save money safely. For example, we structure entities wisely. We claim credits for businesses. We accelerate depreciation on assets. Consequently, you stay compliant. You prepare for audits. You lead the pack. This lets you grow your business freely.

We ensure expert IRS compliance. This avoids audits and penalties. We keep filings accurate and on time. We minimize red flags. Moreover, we tailor proven tax-saving strategies. They suit your industry. Whether real estate or tech, we adapt. Finally, we offer peace of mind. You avoid nightmares like Carnes’. Our proactive steps include audit help. We provide planning sessions and give ongoing advice.  We leverage qualified business income deductions. All stays fully legal.

We lower taxes ethically. No tricks here. Just smart planning the IRS approves.

If you seek “best CPA for business tax savings” or “how to legally reduce taxes for small businesses,” choose us. Our successes prove it. We maximize credits for startups. Schedule a consult today.

Please note that this blog post is for informational purposes only and does not constitute tax, legal or accounting advice and that new changes in rules and regulations may render this content out of date.

Are you earning overtime pay? Starting in 2025, you might deduct part of it from your taxes. This new rule cuts taxes on overtime. It targets the extra “half” in time-and-a-half pay. Read on to learn how it works. Discover eligibility, limits, and reporting rules. This guide boosts your tax savings.

What Is the No Tax on Overtime Deduction?

Congress introduces a fresh tax break. It applies from 2025 to 2028. You deduct qualified overtime compensation. Focus on pay above your regular rate. Think of the “half” in “time-and-a-half.” The Fair Labor Standards Act (FLSA) mandates this overtime.

You qualify if FLSA requires the pay. Employers report it on Form W-2 or Form 1099. They might use other specified statements too. Claim this deduction easily. It fits both itemizers and non-itemizers.

Maximum Deduction Amounts for 2025 Overtime Pay

Single filers deduct up to $12,500 yearly. Joint filers double that to $25,000. These limits cover qualified overtime only.

This rule favors hourly workers. It rewards extra hours without full tax bite.

Income Phase-Out Rules for Overtime Deduction

High earners watch out. The deduction phases out. It starts at modified adjusted gross income (MAGI) over $150,000 for singles. Joint filers see it at $300,000.

Phase-out reduces your deduction gradually. It vanishes at higher incomes. The deduction reduces $100 for each $1,000 by which your modified adjusted gross income exceeds $150,000 ($300,000 in the case of a joint return). Check your MAGI early. Plan your taxes accordingly.

Use tools like tax software. They compute phase-outs automatically. Stay under thresholds to claim full amounts.

Eligibility Requirements for No Tax on Overtime

Meet simple rules to qualify. Include your Social Security Number (SSN) on the return. Married? File jointly to claim it.

This ensures proper verification. The IRS cross-checks your details.

Both employees and contractors benefit. As long as pay meets FLSA rules, you deduct. Non-itemizers rejoice. This above-the-line deduction helps everyone.

How to Claim the Overtime Tax Deduction in 2025

File your return normally. Attach no extra forms yet. The IRS plans guidance soon.

Report overtime correctly. Use employer statements. They show qualified amounts.

Transition relief eases 2025 filings. The IRS forgives minor errors. Claim without fear.

Prepare now. Track overtime hours. Save pay stubs. Consult a tax pro for complex cases.

Employer Reporting for Qualified Overtime Compensation

Employers step up. File information returns with the IRS or SSA. Furnish statements to workers. The IRS plans guidance soon.

Show total qualified overtime paid. Use W-2, 1099, or other forms. Accuracy matters.

Transition relief applies here too. Employers get leeway in 2025. Meet deadlines to avoid penalties.

Workers: Request statements if missing. Verify amounts before filing.

Benefits of the No Tax on Overtime Rule

Save real money. Reduce taxable income by up to $25,000 jointly. Lower your tax bracket possibly.

Boost take-home pay. Encourage overtime work. Support families and businesses.

This temporary rule ends in 2028. Claim it while available. Monitor extensions.

Common Questions About 2025 Overtime Deduction

• Who qualifies? FLSA-covered workers with reported overtime.
• Does it affect state taxes? Check your state rules separately.
• What if I freelance? Yes, if on 1099 and FLSA applies.
• How to calculate? Deduct only the premium portion.

Stay Updated on Tax Changes

Tax laws evolve. Follow our blog for updates. Subscribe for 2025 tax tips.

Contact our accounting team. We handle deductions expertly. Schedule a consult today.

This no tax on overtime deduction empowers workers. Act now to save big. Share this post. Help others claim their share.

Please note that this blog post is for informational purposes only and does not constitute tax, legal or accounting advice and that new changes in rules and regulations may render this content out of date.

Are you planning to buy a new car in 2025? You might save big on taxes. Congress introduced a fresh deduction for car loan interest. This change starts in 2025 and runs through 2028. It lets you deduct interest on loans for qualified vehicles. Read on to learn how this works. Discover if you qualify. Maximize your tax savings today.

What the New Car Loan Interest Deduction Means for You

Lawmakers created this deduction to boost vehicle purchases. It targets personal use cars made in the USA. You deduct up to $10,000 in interest each year. This applies to loans starting after December 31, 2024. Lease payments do not count. Only purchase loans qualify.

The deduction phases out at higher incomes. Single filers lose it above $100,000 modified adjusted gross income (MAGI). Joint filers phase out over $200,000 MAGI. Check your income early. Plan your purchase wisely.

Key Requirements for Qualified Interest

Secure your deduction with the right loan. The loan must originate after December 31, 2024. Use it solely to buy the vehicle. The vehicle starts its use with you. Used vehicles do not qualify. Limit it to personal use. Avoid business or commercial purposes.

Lenders secure the loan with a lien on the vehicle. This protects your eligibility. Refinance later? Interest on the refinanced amount often qualifies. Review terms carefully. Confirm with your lender.

Defining a Qualified Vehicle for the Deduction

Choose the right ride to claim this benefit. Qualified vehicles include cars, minivans, vans, SUVs, pick-up trucks, and motorcycles. They must weigh less than 14,000 pounds gross vehicle weight rating (GVWR). Final assembly has to happen in the United States.

Verify assembly location. Check the VIN sticker. It shows the country of final assembly. Pick US-assembled models. Support domestic manufacturing. Enjoy tax perks.

Examples of qualified vehicles:

• Sedans like the Ford Mustang or Chevrolet Malibu.
• SUVs such as the Jeep Wrangler or Toyota RAV4 (US-assembled versions).
• Pick-ups like the Ram 1500 or GMC Sierra.
• Motorcycles from brands like Harley-Davidson.

Skip heavy-duty trucks over 14,000 pounds GVWR. They do not qualify.

Who Can Claim the Car Loan Interest Deduction?

Good news for all taxpayers. You claim this whether you itemize or take the standard deduction. It acts like an above-the-line deduction. Reduce your taxable income directly.

Include the VIN on your tax return. Do this every year you claim the deduction. The VIN proves vehicle eligibility. Keep records handy. File accurately to avoid audits.

How Reporting Works for Lenders and Borrowers

Lenders report qualified interest to the IRS. They file information returns. They send statements to you. These show total interest paid in the year.

The IRS offers transition relief for 2025. This helps lenders adjust to new rules. Expect smooth reporting by 2026. Review your statements. Use them for your return.

Steps to Claim Your 2025 Car Loan Interest Deduction

Follow these steps. Secure your savings.

1. Buy a qualified vehicle after December 31, 2024.
2. Get a secured loan for personal use.
3. Track interest payments.
4. Receive your lender’s statement.
5. Enter the VIN on your tax form.
6. Deduct up to $10,000, adjusted for phase-out.

Consult a tax pro. They calculate your MAGI. They ensure compliance.

Limitations

But there is a catch. Higher earners will see a reduction in this deduction. If you your modified adjusted gross income is over $100,000 ($200,000 if you file jointly), you phase out. Still, claim what you can.

Common Pitfalls to Avoid with This Tax Break

Do not mix business use. Keep the vehicle personal. Skip used cars. They disqualify you. Forget the VIN? The IRS rejects your claim.

Refinance wisely. Ensure the new loan meets criteria. Watch income thresholds. They change your deduction amount.

Why This Deduction Boosts the Economy

Lawmakers aim to stimulate auto sales. They encourage US manufacturing. Buyers like the benefit. Dealerships thrive. Jobs grow in assembly plants.

Stay updated. Tax laws evolve. Follow IRS guidance.

Ready to Deduct Your Car Loan Interest? Contact Us Today

This new rule simplifies tax savings on car loans. Act now for 2025. Unsure about eligibility? Our accounting experts help. We handle deductions, reporting, and more. Schedule a consultation. Drive away with peace of mind.

Please note that this blog post is for informational purposes only and does not constitute tax, legal or accounting advice and that new changes in rules and regulations may render this content out of date.

The Big Beautiful Bill Act brings a new tax incentive for manufacturing industry: the special depreciation allowance for qualified production property.

Extra Depreciation

This incentive lets you deduct the entire cost of building a manufacturing facility in the year you put the facility into use, instead of spreading the deduction over the usual 39 years for buildings. This is a special type of bonus depreciation called the “qualified production property” deduction.

Who Can Use This

This applies to domestic (US) nonresidential real property (like factories or warehouses) used for:

• manufacturing, or
• refining tangible goods or
• agricultural production or
• chemical production

Requirements

There is an important requirement: the property must undergo a “substantial transformation.” This means the process changes raw materials into a finished product, like turning steel into car parts. The Act specifies that the Secretary must issue regulations and guidance to what constitutes substantial transformation, so we are not clear on that yet.

Any portion of the property you use for activities not related to the manufacturing activity like: parking, storage, office space, admin work, sales activities, research etc. you have to depreciate over 39 years, because it does not qualify for this incentive.

Construction must start between January 19, 2025, and January 1, 2029 and you must place the property in service (ready for use) before January 1, 2031.

Depreciation Recapture

And you must use the “qualified property” for at least 10 years in the manufacturing, production or refining activity, otherwise, you have to “give back” the tax benefit. When you stop using the property in a qualified production activity you will have a “depreciation recapture”. It will be considered like you sold the property at fair market value.

These are the general provisions, but we expect regulations and guidance from the IRS in the coming months.

If you need a good CPA firm for your business that works with you throughout the year, not only at tax time, contact us.

Please note that this blog post is for informational purposes only and does not constitute tax, legal or accounting advice and that new changes in rules and regulations may render this content out of date.

Congress has just passed comprehensive new tax reform legislation and was signed into law on July 4th, 2025. This will significantly impact taxes for everyone. Generally The One Big Beautiful Bill Act includes favorable tax provisions and here are the key provisions:

100% BONUS DEPRECIATION applying to property acquired after January 19, 2025- Write Off Equipment Immediately

When you buy equipment, machinery, or other business property, you can now deduct the entire cost in the year you buy it. For example, if you buy a $100,000 machine for your business, you can deduct the full $100,000 this year instead of spreading it over many years. This also applies to used equipment you purchase.

Transitional Provisions: The bill includes a transitional election to elect a reduced percentage (40% or 60%) for property placed in service in the first taxable year ending after January 19, 2025.

Section 199A (20% Business Income Deduction) Enhanced

The One Big Beautiful Bill Act enhances Section 199A by making it permanent and broadening the phase-out ranges.

Section 179 Expensing Doubled

Limits increase from $1 million to $2.5 million with phase-out beginning at $4 million.

R&D Expenses

Research and development costs can be immediately deducted rather than amortized over 5 years.

New Manufacturing Facility Incentive

The One Big Beautiful Bill Act provides for 100% immediate write-off for construction of domestic manufacturing facilities.

Child Tax Credit Increased

From $2,000 to $2,200 per child (partially refundable).

SALT Cap Relief

State and local tax deduction increases to $40,000 (joint filers) from $10,000, though phases down for incomes above $500,000.

Enhanced Dependent Care Benefits

FSA limit increases to $7,500; child care credit percentages improved.

New Education Savings

The One Big Beautiful Bill Act provides for “Trump Accounts” for children with tax-free growth and expanded 529 plan eligible expenses.

Estate Tax Exemption

The $15 million per person is made permanent.

Clean Energy Tax Credits

Most energy credits (EVs, solar, energy efficient improvements) terminate between September 2025 and December 2027.

If you need a good CPA firm for your business that works with you throughout the year, not only at tax time, contact us.

Please note that this blog post is for informational purposes only and does not constitute tax, legal or accounting advice and that new changes in rules and regulations may render this content out of date.

You can check our YouTube channel for more subjects that you might find useful.