Boost your tax savings by donating appreciated stock instead of cash

Jacob Courtright on October 20, 2025

Saving taxes probably isn’t your primary reason for supporting your favorite charities. But tax deductions can be a valuable added benefit. If you donate long-term appreciated stock, you potentially can save even more.

Not just a deduction

Appreciated publicly traded stock you’ve held more than one year is long-term capital gains property. If you donate it to a qualified charity, you may be able to enjoy two tax benefits.

First, if you itemize deductions, you can claim a charitable deduction equal to the stock’s fair market value. Second, you won’t be subject to the capital gains tax you’d owe if you sold the stock.

Donating appreciated stock can be especially beneficial to taxpayers facing the 3.8% net investment income tax (NIIT) or the top 20% long-term capital gains rate this year.

The strategy in action

Let’s say you donate $15,000 of stock that you paid $5,000 for, your ordinary-income tax rate is 37% and your long-term capital gains rate is 20%. Let’s also say you itemize deductions.

If you sold the stock, you’d pay $2,000 in tax on the $10,000 gain. If you were also subject to the 3.8% NIIT, you’d pay another $380 in NIIT.

By instead donating the stock to charity, you save $7,930 in federal tax ($2,380 in capital gains tax and NIIT plus $5,550 from the $15,000 income tax deduction). If you donated $15,000 in cash, your federal tax savings would be only $5,550.

3 important considerations

There are a few things to keep in mind when considering a stock donation:

The charitable deduction will provide a tax benefit only if your total itemized deductions exceed your standard deduction. For 2025, the standard deduction is $15,750 for singles and married couples filing separately, $23,625 for heads of households, and $31,500 for married couples filing jointly.
Donations of long-term capital gains property are subject to tighter deduction limits. The limits are 30% of your adjusted gross income for gifts to public charities and 20% for gifts to nonoperating private foundations (compared to 60% and 30%, respectively, for cash donations).
Don’t donate stock that’s worth less than your basis. Instead, sell the stock so you can deduct the loss and then donate the cash proceeds to charity.

A tried-and-true year-end tax strategy

If you expect to itemize deductions on your 2025 tax return, making charitable gifts by December 31 is a great way to reduce your tax liability. And donating highly appreciated stock you’ve hesitated to sell because of the tax cost can be an especially smart year-end strategy. To learn more about minimizing capital gains tax or maximizing charitable deductions, contact us today.

FAQs about creating and optimizing customer profiles in QuickBooks

Jacob Courtright on September 22, 2025

Small business owners might be tempted to rush through setting up customer profiles in QuickBooks® just to get invoices out quickly. But the extra data fields aren’t just busy work. Complete, accurate customer records help you generate more insightful reports, communicate with customers more effectively and save time on bookkeeping tasks later. Here are answers to some common questions to help ensure your files are set up properly in your accounting software.

How do you create customer profiles?

If you already have customer information stored in a spreadsheet, you can import it directly into QuickBooks Online. Make sure the first row contains clear column headers; then use the import tool to match each column from the spreadsheet with the corresponding field in QuickBooks. Reviewing QuickBooks’ sample import file first is a smart way to catch formatting issues before you upload.

If you don’t have an existing database of customer information or don’t want to deal with the import process, you can enter each customer manually. QuickBooks provides a customer record template for manual entries.

You technically need only a customer name to get started, but you’ll want to fill in other details, such as tax status, opening balance, payment terms, and preferred delivery and payment methods. When you enter more than just a name, QuickBooks automatically applies the appropriate settings whenever you create a sales form. That means fewer manual edits and fewer mistakes. It also means you can see balances and history at a glance, making it easier to follow up on overdue invoices or spot your best customers.

Customer profiles are easy to edit as you get more information. So you can start small and gradually build them out. Also, get in the habit of updating profiles when things change — such as a new contact person or billing address — to keep your records accurate.

How can you use customer records?

Once a profile is saved, it appears in your customer list. This serves as a dashboard for all customer-related actions. From there, you can create invoices, send reminders for overdue balances and drill down into customers’ profile pages.

Each profile page (or “homepage”) shows the customer’s contact information, transaction history, open estimates and account balance — all in one place. This makes it easy to answer questions on the spot. For instance, if a customer asks about their outstanding balance, you can open the profile, click “transaction list” and immediately see unpaid invoices. You can even email a statement directly from that screen without switching tabs or running a separate report. For businesses with recurring work, this page also serves as a quick reference for which jobs or projects are in progress and what’s already been billed.

When should you create sub-customers?

Depending on the nature of your business, you might want to set up sub-customer records. This functionality allows you to “nest” a customer or job under a “parent” customer.

For instance, an advertising firm might set up each campaign as a sub-customer to track project-level profitability. Or a home builder might set up different properties, projects or phases as sub-customers. This setup keeps everything tied to the main customer while allowing detailed job-cost tracking. You can choose whether invoices go to the parent or the sub-customer.

For more information

Spending a little extra time setting up and maintaining customer profiles in QuickBooks pays off in the long run with improved accuracy, time savings and better insights. You’ll have faster answers when customers call and more accurate reports for marketing and decision-making purposes. Contact us with additional questions about managing customer records in QuickBooks or any other elements of this essential bookkeeping tool.

The power of catch-up retirement account contributions after 50

Jacob Courtright on September 17, 2025

Are you age 50 or older? You’ve earned the right to supercharge your retirement savings with extra “catch-up” contributions to your tax-favored retirement account(s). And these contributions are more valuable than you may think.

IRA contribution amounts

For 2025, eligible taxpayers can make contributions to a traditional or Roth IRA of up to the lesser of $7,000 or 100% of earned income. They can also make extra catch-up contributions of up to $1,000 annually to a traditional or Roth IRA. If you’ll be 50 or older as of December 31, 2025, you can make a catch-up contribution for the 2025 tax year by April 15, 2026.

Extra deductible contributions to a traditional IRA create tax savings, but your deduction may be limited if you (or your spouse) are covered by a retirement plan at work and your income exceeds a certain amount.

Extra contributions to Roth IRAs don’t generate any upfront tax savings, but you can take federal-income-tax-free qualified withdrawals after age 59½. There are also income limits on Roth contributions.

Higher-income individuals can make extra nondeductible traditional IRA contributions and benefit from the tax-deferred earnings advantage.

Employer plan contribution amounts

For 2025, you can contribute up to $23,500 to an employer 401(k), 403(b) or 457 retirement plan. If you’re 50 or older and your plan allows it, you can contribute up to an additional $7,500 in 2025. Check with your human resources department to see how to sign up for extra contributions.

Contributions are subtracted from your taxable wages, so you effectively get a federal income tax deduction. You can use the tax savings to help pay for part of your extra catch-up contribution, or you can set the tax savings aside in a taxable retirement savings account to further increase your retirement wealth.

Examples of how catch-up contributions grow

How much can you accumulate? To see how powerful catch-up contributions can be, let’s run a few scenarios.

Example 1: Let’s say you’re age 50 and you contribute an extra $1,000 catch-up contribution to your IRA this year and then do the same for the following 15 years. Here’s how much extra you could have in your IRA by age 65 (rounded to the nearest $1,000):

4% annual return: $22,000
8% annual return: $30,000

Keep in mind that making larger deductible contributions to a traditional IRA can also lower your tax bill. Making additional contributions to a Roth IRA won’t, but they’ll allow you to take more tax-free withdrawals later in life.

Example 2: Assume you’ll turn age 50 next year. You contribute an extra $7,500 to your company plan in 2026. Then, you do the same for the next 15 years. Here’s how much more you could have in your 401(k), 403(b), or 457 plan account (rounded to the nearest $1,000):

4% annual return: $164,000
8% annual return: $227,000

Again, making larger contributions can also lower your tax bill.

Example 3: Finally, let’s say you’ll turn age 50 next year and you’re eligible to contribute an extra $1,000 to your IRA for 2026, plus you make an extra $7,500 contribution to your company plan. Then, you do the same for the next 15 years. Here’s how much extra you could have in the two accounts combined (rounded to the nearest $1,000):

4% annual return: $186,000
8% annual return: $258,000

The amounts add up quickly

As you can see, catch-up contributions are one of the simplest ways to boost your retirement wealth. If your spouse is eligible too, the impact can be even greater. Contact us if you have questions or want to see how this strategy fits into your retirement savings plan.

Payroll tax implications of new tax breaks on tips and overtime

Jacob Courtright on September 9, 2025

Before the One Big Beautiful Bill Act (OBBBA), tip income and overtime income were fully taxable for federal income tax purposes. The new law changes that.

Tip income deduction

For 2025–2028, the OBBBA creates a new temporary federal income tax deduction that can offset up to $25,000 of annual qualified tip income. It begins to phase out when modified adjusted gross income (MAGI) is more than $150,000 ($300,000 for married joint filers).

The deduction is available if a worker receives qualified tips in an occupation that’s designated by the IRS as one where tips are customary. However, the U.S. Treasury Department recently released a draft list of occupations it proposes to receive the tax break and there are some surprising jobs on the list, including plumbers, electricians, home heating / air conditioning mechanics and installers, digital content creators, and home movers.

Employees and self-employed individuals who work in certain trades or businesses are ineligible for the tip deduction. These include health, law, accounting, financial services, investment management and more.

Qualified tips can be paid by customers in cash or with credit cards or given to workers through tip-sharing arrangements. The deduction can be claimed whether the worker itemizes or not.

Overtime income deduction

For 2025–2028, the OBBBA creates another new federal income tax deduction that can offset up to $12,500 of qualified overtime income each year or up to $25,000 for a married joint-filer. It begins to phase out when MAGI is more than $150,000 ($300,000 for married joint filers). The limited overtime deduction can be claimed whether or not workers itemize deductions on their tax returns.

Qualified overtime income means overtime compensation paid to a worker as mandated under Section 7 of the Fair Labor Standards Act (FLSA). It requires time-and-a-half overtime pay except for certain exempt workers. If a worker earns time-and-a-half for overtime, only the extra half constitutes qualified overtime income.

Qualified overtime income doesn’t include overtime premiums that aren’t required by Section 7 of the FLSA, such as overtime premiums required under state laws or overtime premiums pursuant to contracts such as union-negotiated collective bargaining agreements. Qualified overtime income also doesn’t include any tip income.

Payroll tax implications

While you may have heard the new tax breaks described as “no tax on tips” and “no tax on overtime,” they’re actually limited, temporary federal income tax deductions as opposed to income exclusions. Therefore, income tax may apply to some of your wages and federal payroll taxes still apply to qualified tip income and qualified overtime income. In addition, applicable federal income tax withholding rules still apply. And tip income and overtime income may still be fully taxable for state and local income tax purposes.

The real issue for employers and payroll management firms is reporting qualified tip income and qualified overtime income amounts so eligible workers can claim their rightful federal income tax deductions.

Reporting details

The tip deduction is allowed to both employees and self-employed individuals. Qualified tip income amounts must be reported on Form W-2, Form 1099-NEC, or another specified information return or statement that’s furnished to both the worker and the IRS.

Qualified overtime income amounts must be reported to workers on Form W-2 or another specified information return or statement that’s furnished to both the worker and the IRS.

IRS announcement about information returns and withholding tables

The IRS recently announced that for tax year 2025, there will be no OBBBA-related changes to federal information returns for individuals, federal payroll tax returns or federal income tax withholding tables. So, Form W-2, Forms 1099, Form 941, and other payroll-related forms and returns won’t be changed. The IRS stated that “these decisions are intended to avoid disruptions during the tax filing season and to give the IRS, business and tax professionals enough time to implement the changes effectively.”

Employers and payroll management firms are advised to begin tracking qualified tip income and qualified overtime income immediately and to implement procedures to retroactively track qualified tip and qualified overtime income amounts that were paid before July 4, 2025, when the OBBBA became law. The IRS is expected to provide transition relief for tax year 2025 and update forms for tax year 2026. Contact us with any questions.

Evaluating business decisions using breakeven analysis

Jacob Courtright on September 8, 2025

You shouldn’t rely on gut instinct when making major business decisions, such as launching a new product line, investing in new equipment or changing your pricing structure. Projecting the financial implications of your decision (or among competing alternatives) can help you determine the right course of action — and potentially persuade investors or lenders to finance your plans. One intuitive tool to consider for these applications is breakeven analysis.

What’s the breakeven point?

The breakeven point is simply the sales volume at which revenue equals total costs. Any additional sales above the breakeven point will result in a profit. To calculate your company’s breakeven point, first categorize all costs as either fixed (such as rent and administrative payroll) or variable (such as materials and direct labor).

Next, calculate the contribution margin per unit by subtracting variable costs per unit from the price per unit. Companies that sell multiple products or offer services typically estimate variable costs as a percentage of sales. For example, if a company’s variable costs run about 40% of annual revenue, its average contribution margin would be 60%.

Finally, add up fixed costs and divide by the unit (or percentage) contribution margin. In the previous example, if fixed costs were $600,000, the breakeven sales volume would be $1 million ($600,000 ÷ 60%). For each $1 in sales over $1 million, the hypothetical company would earn 60 cents.

When computing the breakeven point from an accounting standpoint, depreciation is normally included as a fixed expense, but taxes and interest usually are excluded. Fixed costs should also include all normal operating expenses (such as payroll and maintenance). The more items included in fixed costs, the more realistic the estimate will be.

How might you apply this metric?

To illustrate how breakeven analysis works: Suppose Joe owns a successful standalone coffee shop. He’s considering opening a second location in a nearby town. He’s familiar with the local market and the ins and outs of running a successful small retail business. But Joe likes to do his homework, so he collects the following cost data for opening a second location:

$10,000 of monthly fixed costs (including rent, utilities, insurance, advertising and the manager’s salary), and
$1.50 of variable costs per cup (including ingredients, paper products and barista wages).

If the new store plans to sell coffee for $4 per cup, what’s the monthly breakeven point? The estimated contribution margin would be $2.50 per cup ($4 − $1.50). So, the store’s monthly breakeven point would be 4,000 cups ($10,000 ÷ $2.50). Assuming an average of 30 days per month, the store would need to sell approximately 134 cups each day just to cover its operating costs. If Joe’s original store sells an average of 200 cups per day, this gives him a useful benchmark, though market dynamics may differ between locations. If Joe forecasts daily sales for the new store of 180 cups, it leaves a daily safety margin of 46 cups, which equates to roughly $115 in daily profits (46 × $2.50).

Joe can take this analysis further. For example, he knows there’s already another boutique coffee shop near the prospective location, so he’s considering lowering the price per cup to $3.75. Doing so would reduce his contribution margin to $2.25, causing his breakeven point to jump to 4,445 cups per month (about 148 cups per day). Assuming forecasted sales of 180 cups per day, the reduced price would lower the daily safety margin to 32 cups, which equates to about $72 in daily profits (32 × $2.25).

Joe might also consider other strategies to reduce his breakeven point and increase profits. For instance, he could negotiate with the landlord to reduce his monthly rent or find a supplier with less expensive cups and napkins. Joe could plug these changes into his breakeven model to see how sensitive profits are to cost changes.

If Joe opens the new store, he can monitor actual sales against his forecast to see if the store is on track. If not, he might need to consider changes, such as increasing the advertising budget or revising his prices. Then he can enter the revised inputs into his breakeven model. He could also revise his breakeven model based on actual costs incurred after the store opens.

We can help

Breakeven analysis is often more complex than this hypothetical example shows. However, it can be a valuable addition to your financial toolkit. Besides assisting with expansion planning, breakeven analysis can help you evaluate spending habits, set realistic sales goals and prices, and judge whether projected sales will sustain your business during an economic downturn. Contact us to learn how to analyze breakeven for your organization and leverage the data to make informed decisions about your business’s long-term financial stability.

Author: Jacob Courtright

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