Key Financial Solutions Inc

The 40% generation-skipping transfer (GST) tax generally applies to transfers made to people two generations or more below you, like your grandchildren. And it applies on top of any gift or estate tax due. The good news is that a large GST tax exemption is available: $15 million for 2026. So most taxpayers don’t need to worry about the GST tax. But if you have a large estate, you can allocate your GST tax exemption to contributions to a dynasty trust and allow assets to skip several generations of taxation. Contact us at (313) 221-9397 to learn more.

Certain “small” businesses have a choice of using cash or accrual accounting for tax purposes. If you’re one of them, which route should you take? Cash-basis businesses recognize income when received and deduct expenses when paid, providing greater flexibility in the timing of income and deductions. In contrast, accrual-basis businesses recognize income when earned and deduct expenses when incurred, regardless of the timing of cash receipts or payments. Even if you meet the eligibility requirements, the cash method isn’t right for every business. And switching methods adds administrative costs. Contact us at (313) 221-9397 to learn more about each option.

As a small business owner, it’s easy to think of a succession plan as involving only two people: you and your successor. But a smooth transition may also require support from managers and other key employees. Communicating thoughtfully about your intentions and progress can help build confidence, reduce uncertainty and keep the business moving forward. Contact us at (313) 221-9397 for help addressing the tax, financial and strategic aspects of your plan.

Will your Social Security benefits be taxable? A portion might be. How much depends on your provisional income, your overall income and IRS thresholds. Provisional income is your adjusted gross income with some additional calculations. You may have to report up to 85% of your Social Security benefits as taxable income if your provisional income is over $34,000 ($44,000 for joint filers). If you file separately from your spouse who lived with you at any time during the year, the threshold is $0. Smart tax planning can potentially reduce your liability. We can help project your provisional income and review your overall tax situation to identify strategies that make sense for you. Call us at (313) 221-9397.

Are you paying yourself and family members who work in your business reasonable compensation? The IRS requires compensation (including salaries, bonuses and perks) to reflect services performed and be comparable to compensation for similar roles in similar organizations. This is especially important for owner-employees and related parties. Payments to relatives may be deductible, but only if they represent reasonable wages for bona fide services and are well documented. Excess compensation may be reclassified as nondeductible distributions of income, while underpaying may raise payroll tax issues. Regularly reviewing compensation practices can help reduce audit risk. Call us at (313) 221-9397 for guidance.

What’s the right entity type for your new business? Two popular options for closely held businesses with multiple owners are LLCs taxed as partnerships and S corporations. Both offer pass-through taxation, meaning tax items pass through to the individual owners and are reported on their personal returns. But they differ in important ways, such as self-employment tax, loss deductions, ownership flexibility and eligibility requirements. Before making your decision, contact us at(313) 221-9397. Taxes play a pivotal role in this decision. We can work with you and your legal advisors to determine the optimal setup for your situation.

Monthly financial statements are essential. But they often take weeks to prepare and may arrive after you’ve already made critical business decisions. Flash reports can help bridge that gap by providing real-time snapshots of critical metrics — such as cash balances, collections and payroll. These reports provide timely insight into financial performance, allowing you to identify emerging issues before they become major problems. Because flash reports are preliminary, you should use them as management tools, not formal financial statements. Call us at (313) 221-9397 to discuss how customized flash reports can help your business make faster, more informed financial decisions.

Can taxpayers deduct alimony payments? It depends on when you signed your divorce or separation agreement. If it was made in 2019 or later, you can’t deduct alimony (and alimony’s not included in the recipient’s taxable income). But these payments are generally deductible (and taxable to the recipient) if they’re subject to an agreement made before 2019 — unless it was modified. As for child support payments, they aren’t deductible if you make them or considered taxable income if you receive them, regardless of when the agreement was signed. If you’re going through a divorce, consult us. We can work with your attorney to manage tax issues and minimize your tax burden. Call us at (313) 221-9397.

You probably have retirement questions: How much should I save before I quit working? When should I start taking Social Security benefits? Can I retire before Medicare coverage kicks in? What about taxes in retirement? We can provide you with answers based on your individual financial circumstances and retirement goals. Contact us at (313) 221-9397.

In the event of divorce, part or all of a married couple’s business will often be considered divisible marital property. If you’re in this situation, you likely can divide your business ownership interests without triggering federal income or gift taxes. The spouse receiving the interests assumes the existing tax basis (to determine future gain or loss) and holding period. Tax-free treatment generally applies to transfers made before, during or up to a year after the divorce. Transfer recipients will owe taxes on any gain if they later sell the ownership interests. Call us at (313) 221-9397 for more information on the tax implications of divorce.