Month: July 2025

Are you a high-income solo business owner seeking to supercharge your retirement savings while cutting your tax bill? If so, there’s a powerful tool that may surprise you: the defined benefit plan.

Often associated with large corporations or government jobs, defined benefit plans can also be a strategic solution for self-employed professionals and sole owners of corporations—especially those professionals and owners nearing retirement and earning steady six- or seven-figure incomes. Unlike SEP IRAs or solo 401(k)s, which cap your annual contributions, a defined benefit plan allows much larger, tax-deductible contributions based on your desired retirement benefit.

Why Consider a Defined Benefit Plan?

This plan could be ideal for you if you’re

• age 50 or older;
• earning consistent, high income;
• interested in contributing more than $70,000 annually; and
• willing to commit to multi-year contributions.

For instance, someone earning $1 million per year might contribute $300,000 annually—potentially saving over $100,000 in federal taxes.

How It Works

An actuary determines your annual contribution based on your age, income, and retirement timeline. For 2025, the IRS allows the following:

• Funding of up to $280,000 per year in retirement benefits
• Up to $3.5 million in total plan accumulation
• Contributions based on compensation up to $350,000

This makes the defined benefit plan one of the most robust retirement and tax-deferral vehicles available.

Important Considerations

Defined benefit plans require setup and maintenance costs, including annual actuarial evaluations and filings. Expect to invest $1,000–$4,000 annually for administration. Funds are generally locked until retirement, and early withdrawals are subject to penalties.

However, the long-term benefits can be substantial, both for your future retirement security and for your current tax position.

If you would like to discuss the defined benefit plan, please call me directly at 408-778-9651.

• By Leon Clinton
• July 29, 2025

You and your business likely benefit from attending business conventions and seminars. It’s essential to know which expenses you can deduct—and how to ensure they qualify.

As a business owner, you might assume that if a seminar is “business related,” it’s automatically deductible. But that’s not always the case. The IRS sets specific requirements depending on the location of the event. To help you keep your deductions intact, here’s what you need to know.

Three Categories of Events

Conventions and seminars fall into one of three tax categories:

• North American
• Foreign
• Cruise ship

North American conventions—including those in places like Jamaica, New York, Mexico, Chicago, and Puerto Rico—are generally deductible as long as attending benefits your business. The IRS defines “North America” broadly, based on specific treaties and agreements.

Foreign conventions and seminars are those that take place outside the North American area and have stricter rules. To qualify, the event must directly relate to your trade or business, and it must be as reasonable to hold it abroad as within North America. You’ll likely need an international audience and clear justification.

Cruise ship conventions face the most limitations. The ship must be U.S.-flagged and make all stops in the U.S. or U.S. territories. Furthermore, lawmakers cap the deduction at $2,000 per year. Both you and the event organizer must supply statements of attendance with your tax return.

Documentation Requirements

Regardless of your business structure, documentation is essential. For sole proprietors, deduct the expenses directly. If you operate as a corporation, either pay through the corporate account or submit an expense report for reimbursement. Regardless of the method, make sure the corporation has the required documentation in its records.

Deductions

You can deduct the cost of the event, your travel, and daily expenses—but only if the event qualifies under the rules.

If you would like to discuss conventions and seminars, please call me directly at 408-778-9651.

• By Leon Clinton
• July 25, 2025

Current tax law allows homeowners to claim up to $3,200 per year in tax credits for energy-efficient home improvements. But these incentives may soon vanish.

Pending tax legislation in Congress could eliminate these benefits for improvements placed in service after December 31, 2025.

What’s Available?

There are two key credits to know about.

1. Up to $1,200/year for energy improvements to your primary residence, including:

• Exterior doors (up to $500 total)
• Windows and skylights (up to $600)
• Insulation and air sealing materials
• Energy-efficient furnaces, boilers, water heaters, air conditioners, and electric panels

2. Up to $2,000/year for advanced systems installed in either your main or second home:

• Electric or natural gas heat pumps
• Electric or natural gas heat pump water heaters
• Biomass stoves and boilers

Additionally, a $150 credit is available for a certified home energy audit, which helps you identify the most cost-effective upgrades.

Important Details

These are non-refundable annual credits, so they reduce your tax bill—but don’t result in a refund.

There’s no lifetime limit, meaning you can claim the credit again each year if you continue to make qualifying improvements (assuming the law remains in effect).

Improvements must meet specific energy-efficiency standards and be installed (not just purchased) by the deadline.

You must subtract subsidies or rebates (such as those from utilities) from the cost basis used to calculate your credit.

Take Action Now

If you’ve been considering upgrades such as insulation, new windows, or high-efficiency heating systems, now may be your last chance to take full advantage of these credits. Given the looming legislative changes, we recommend planning and scheduling any eligible improvements as soon as possible.

If you would like to discuss the tax implications of home improvements, please call me directly at 408-778-9651.

• By Leon Clinton
• July 23, 2025