Rescissions Act of 2025 (HR 4) – A rescission bill cancels funding previously approved by Congress upon request by the president. Congress has 45 continuous legislative days to enact or reject the proposal, during which time the funds may be temporarily withheld. Introduced by Rep. Steve Scalise (R-LA) on June 6, the House passed this bill on June 12 and the Senate passed it on July 17. Signed into law on July 24, this bill cancels nearly $9 billion in funding for a variety of programs, including foreign aid and the Corporation for Public Broadcasting.
Filing Relief for Natural Disasters Act (HR 517) – On July 24, the president signed into law this bill that allows taxpayers to postpone their filings if their state governor has declared a natural disaster, rather than waiting for the president to declare a federal disaster. The bill was introduced by Rep. David Kustoff on Jan. 16, passed in the House on March 31 and in the Senate on July 10.
Maintaining American Superiority by Improving Export Control Transparency Act (HR 1316) – Introduced by Rep. Ronny Jackson (R-TX) on Feb. 13, this legislation is designed to crack down on U.S. adversaries acquiring cutting-edge technology. The bill mandates that the Secretary of Commerce submit an annual report to Congress detailing dual-use export license applications and other requests for authorization for the export, re-export, release and in-country transfer of controlled items to arms-embargoed countries such as China, Russia, Iran and North Korea. The legislation was passed in the House on May 5, the Senate on May 22 and was signed into law on Aug. 19.
PRO Veterans Act of 2025 (S 423) – The purpose of this act is to prevent fraud and abuse via increased oversight of the Veterans Affairs Department, including critical skill bonuses paid out to senior executives. Moreover, the bill requires quarterly, in-person briefings to congressional veterans’ committees regarding VA departmental budget shortfalls. The legislation was introduced by Sen. Dan Sullivan (R-AK) on Feb. 5, passed in the Senate on April 8 and in the House on July 21. The bill was enacted on Aug. 19.
VA Home Loan Program Reform Act (HR 1815) – This bill was introduced on March 3 by Rep. Derrick Van Orden (R-WI), passed in the House on May 19, the Senate on July 15, and signed into law on July 30. The law reauthorizes the VA home loan partial claim and Veterans Affairs Servicing Purchase (VASP) programs. These programs are designed to help distressed veteran homeowners avoid foreclosure by enabling the VA to purchase a portion of indebtedness (25 percent to 30 percent of the unpaid principal balance) of a VA home loan secured by the primary residence of the borrower.
Improving Veterans’ Experience Act of 2025 (S 264) – This bill is meant to improve satisfaction with VA benefits and services by compiling feedback from veterans, families and caregivers. This legislation establishes a Veterans Experience Office (VEO) to manage customer experience initiatives, collect data and coordinate VA departments in order to prevent duplicate efforts and ensure consistent improvements across the board. The bill was introduced on Jan. 28 by Sen. Angus King (I-ME), passed in the Senate on April 8, the House on July 21 and was enacted on Aug. 14.
ACES Act of 2025 (S 201) – This act was introduced by Sen. Mark Kelly (D-AZ) on Jan. 23. It directs the secretary of the VA to study cancer and mortality rates among aviators and aircrews who served in the Navy, Air Force and Marine Corps; and to correlate incidents of cancer among this select group of military personnel. The legislation passed in the Senate on June 3, the House on July 21, and was signed by the president on Aug. 14.
Canceling Government Funding and Expanding Protections for Veterans
September 1, 2025 · Blog, Congress at Work, Uncategorized
⏱ 3 min read
Rescissions Act of 2025 (HR 4) – A rescission bill cancels funding previously approved by Congress upon request by the president. Congress has 45 continuous legislative days to enact or reject the proposal, during which time the funds may be temporarily withheld. Introduced by Rep. Steve Scalise (R-LA) on June 6, the House passed this bill on June 12 and the Senate passed it on July 17. Signed into law on July 24, this bill cancels nearly $9 billion in funding for a variety of programs, including foreign aid and the Corporation for Public Broadcasting.
Filing Relief for Natural Disasters Act (HR 517) – On July 24, the president signed into law this bill that allows taxpayers to postpone their filings if their state governor has declared a natural disaster, rather than waiting for the president to declare a federal disaster. The bill was introduced by Rep. David Kustoff on Jan. 16, passed in the House on March 31 and in the Senate on July 10.
Maintaining American Superiority by Improving Export Control Transparency Act (HR 1316) – Introduced by Rep. Ronny Jackson (R-TX) on Feb. 13, this legislation is designed to crack down on U.S. adversaries acquiring cutting-edge technology. The bill mandates that the Secretary of Commerce submit an annual report to Congress detailing dual-use export license applications and other requests for authorization for the export, re-export, release and in-country transfer of controlled items to arms-embargoed countries such as China, Russia, Iran and North Korea. The legislation was passed in the House on May 5, the Senate on May 22 and was signed into law on Aug. 19.
PRO Veterans Act of 2025 (S 423) – The purpose of this act is to prevent fraud and abuse via increased oversight of the Veterans Affairs Department, including critical skill bonuses paid out to senior executives. Moreover, the bill requires quarterly, in-person briefings to congressional veterans’ committees regarding VA departmental budget shortfalls. The legislation was introduced by Sen. Dan Sullivan (R-AK) on Feb. 5, passed in the Senate on April 8 and in the House on July 21. The bill was enacted on Aug. 19.
VA Home Loan Program Reform Act (HR 1815) – This bill was introduced on March 3 by Rep. Derrick Van Orden (R-WI), passed in the House on May 19, the Senate on July 15, and signed into law on July 30. The law reauthorizes the VA home loan partial claim and Veterans Affairs Servicing Purchase (VASP) programs. These programs are designed to help distressed veteran homeowners avoid foreclosure by enabling the VA to purchase a portion of indebtedness (25 percent to 30 percent of the unpaid principal balance) of a VA home loan secured by the primary residence of the borrower.
Improving Veterans’ Experience Act of 2025 (S 264) – This bill is meant to improve satisfaction with VA benefits and services by compiling feedback from veterans, families and caregivers. This legislation establishes a Veterans Experience Office (VEO) to manage customer experience initiatives, collect data and coordinate VA departments in order to prevent duplicate efforts and ensure consistent improvements across the board. The bill was introduced on Jan. 28 by Sen. Angus King (I-ME), passed in the Senate on April 8, the House on July 21 and was enacted on Aug. 14.
ACES Act of 2025 (S 201) – This act was introduced by Sen. Mark Kelly (D-AZ) on Jan. 23. It directs the secretary of the VA to study cancer and mortality rates among aviators and aircrews who served in the Navy, Air Force and Marine Corps; and to correlate incidents of cancer among this select group of military personnel. The legislation passed in the Senate on June 3, the House on July 21, and was signed by the president on Aug. 14.
Disclaimer
These articles provide general information on tax, accounting, and financial topics for small businesses and individuals. They are educational in nature and are not specific legal, accounting, financial, tax, or other professional advice, and should not be relied upon as such. This content was prepared by Service2Client and may have been reviewed or edited by the website owner for accuracy and compliance. Look for a trust mark below for verification details. No representation is made that any approach described will achieve a particular result, and no regulatory or professional body has reviewed or endorsed this content. Because each situation is different, readers should consult a qualified professional about their specific circumstances before acting. Images accompanying these articles are protected by copyright and may not be copied or reused.
Not everyone can make large charitable contributions. But there are ways to be charitable without spending your discretionary income while at the same time lowering your tax bill. Even those who can make large donations benefit from the tax advantages of a cashless donation. The following are ideas for cashless contributions to causes you are passionate about.
Tax Rules
The main thing to remember is that charities are not required to pay taxes on donations (cashless or otherwise). This can make your donation more valuable to them than it would be to you. Note, too, that if your itemized deductions are below the Standard Deduction for your tax filing status, gifting a high-value asset can put you over that cap and provide substantial savings on your tax bill.
The IRS sets limits on deductions for non-cash donations. Contributions of appreciated long-term assets such as stocks or real estate are subject to a limit of 30 percent of adjusted gross income, while other types of non-cash property donations have a 50 percent limit. Cash donations, on the other hand, have a higher limit at 60 percent of AGI. Even so, if the value of the contribution is higher than your deduction limit, you may carry over the excess for up to five years, subject to those same AGI limitations.
Non-cash donations are particularly beneficial for donors in a year they receive a windfall or unexpectedly high income.
Securities
If you own highly appreciated stock, you can donate it to a 501(c)(3) charity and claim the fair market value as a tax deduction. You won’t have to pay taxes on the earnings because you gifted them, nor will the charity once the stock is liquidated for its needs. Consider gifting stock to a charity when you rebalance your portfolio to both reduce the potential tax bill on earnings and reposition the overall portfolio to your target allocation.
Equity Compensation
You may have received employer company stock as a bonus or through an Employee Stock Purchase Plan (ESPP). Consider transferring one or more shares to a charity as a donation. Note that with ESPP shares, you need to have held them for more than two years from the grant date and one year from the purchase date to optimize your tax deduction.
Qualified Charitable Distribution
Traditional IRA owners are required to begin taking an annual minimum distribution (RMD) starting at a specific age. As of 2025, the rules are:
72 if born before Jan. 1, 1951
73 if born between Jan. 1, 1951, and Dec. 31, 1959
75 if born on or after Jan. 1, 1960
However, some people may still be working or have a high income for which RMDs place them in a higher tax bracket. What they can do is make a qualified charitable distribution (QCD) up to $100,000,so that all or a portion of their RMD is sent directly to the charity of their choice. While this tactic does not offer a tax deduction, it does satisfy the IRA owner’s RMD requirement, which essentially reduces their income tax burden.
Real Estate
If you purchased or inherited a piece of property, be it a residential home, undeveloped land, a commercial building or rental property, there are benefits to granting it as a cashless charitable donation. The strategy is best optimized if you’ve owned the property for more than one year, enabling you to avoid capital gains taxes and claim a fair market value charitable deduction for the tax year of the gift.
Automobile
Perhaps you have a spare car you never drive but continue to maintain and insure. Instead, consider donating it to a charity. First, ensure that the charity of your choice will accept a vehicle donation. In some cases, a charity may not even require that the car be in working condition, as it may sell or auction it to raise cash. While most charities will arrange to have the automobile picked up, you will need to remove the license plates and sign over the car title to the organization. You can determine the fair market value (to claim as a tax deduction) by researching pricing guides like Kelly Blue Book or Edmunds.
Collectibles/Art
Some folks collect or inherit items they don’t want anymore. Instead of selling them on Facebook, consider donating them to a charity. First, establish a value for the item(s); for items worth more than $5,000,you’ll need to get a qualified appraisal to determine your tax deduction. Also, make sure the charity of your choice will accept the collectible.
Life Insurance
For an individual who no longer needs their permanent life insurance policy, transferring policy ownership to a charity may be more advantageous than surrendering it and paying taxes on the policy’s appreciation. Donating the policy eliminates your tax liability and qualifies for a deduction. The deduction is the lesser of the policy’s cash value or the cost basis (i.e., premiums paid to date).
Another option is to simply change the beneficiary on your life policy to the charity you choose. You won’t receive a tax deduction until the policy pays out after your death, at which point your estate can claim it.
Time
Don’t forget that in many cases you can donate your time instead of money. Seek out charities that need volunteers, from specific skills and expertise to help with cleaning, delivering, and organizing events.
Cashless Charitable Contributions
September 1, 2025 · Blog, Financial Planning
⏱ 5 min read
Not everyone can make large charitable contributions. But there are ways to be charitable without spending your discretionary income while at the same time lowering your tax bill. Even those who can make large donations benefit from the tax advantages of a cashless donation. The following are ideas for cashless contributions to causes you are passionate about.
Tax Rules
The main thing to remember is that charities are not required to pay taxes on donations (cashless or otherwise). This can make your donation more valuable to them than it would be to you. Note, too, that if your itemized deductions are below the Standard Deduction for your tax filing status, gifting a high-value asset can put you over that cap and provide substantial savings on your tax bill.
The IRS sets limits on deductions for non-cash donations. Contributions of appreciated long-term assets such as stocks or real estate are subject to a limit of 30 percent of adjusted gross income, while other types of non-cash property donations have a 50 percent limit. Cash donations, on the other hand, have a higher limit at 60 percent of AGI. Even so, if the value of the contribution is higher than your deduction limit, you may carry over the excess for up to five years, subject to those same AGI limitations.
Non-cash donations are particularly beneficial for donors in a year they receive a windfall or unexpectedly high income.
Securities
If you own highly appreciated stock, you can donate it to a 501(c)(3) charity and claim the fair market value as a tax deduction. You won’t have to pay taxes on the earnings because you gifted them, nor will the charity once the stock is liquidated for its needs. Consider gifting stock to a charity when you rebalance your portfolio to both reduce the potential tax bill on earnings and reposition the overall portfolio to your target allocation.
Equity Compensation
You may have received employer company stock as a bonus or through an Employee Stock Purchase Plan (ESPP). Consider transferring one or more shares to a charity as a donation. Note that with ESPP shares, you need to have held them for more than two years from the grant date and one year from the purchase date to optimize your tax deduction.
Qualified Charitable Distribution
Traditional IRA owners are required to begin taking an annual minimum distribution (RMD) starting at a specific age. As of 2025, the rules are:
72 if born before Jan. 1, 1951
73 if born between Jan. 1, 1951, and Dec. 31, 1959
75 if born on or after Jan. 1, 1960
However, some people may still be working or have a high income for which RMDs place them in a higher tax bracket. What they can do is make a qualified charitable distribution (QCD) up to $100,000,so that all or a portion of their RMD is sent directly to the charity of their choice. While this tactic does not offer a tax deduction, it does satisfy the IRA owner’s RMD requirement, which essentially reduces their income tax burden.
Real Estate
If you purchased or inherited a piece of property, be it a residential home, undeveloped land, a commercial building or rental property, there are benefits to granting it as a cashless charitable donation. The strategy is best optimized if you’ve owned the property for more than one year, enabling you to avoid capital gains taxes and claim a fair market value charitable deduction for the tax year of the gift.
Automobile
Perhaps you have a spare car you never drive but continue to maintain and insure. Instead, consider donating it to a charity. First, ensure that the charity of your choice will accept a vehicle donation. In some cases, a charity may not even require that the car be in working condition, as it may sell or auction it to raise cash. While most charities will arrange to have the automobile picked up, you will need to remove the license plates and sign over the car title to the organization. You can determine the fair market value (to claim as a tax deduction) by researching pricing guides like Kelly Blue Book or Edmunds.
Collectibles/Art
Some folks collect or inherit items they don’t want anymore. Instead of selling them on Facebook, consider donating them to a charity. First, establish a value for the item(s); for items worth more than $5,000,you’ll need to get a qualified appraisal to determine your tax deduction. Also, make sure the charity of your choice will accept the collectible.
Life Insurance
For an individual who no longer needs their permanent life insurance policy, transferring policy ownership to a charity may be more advantageous than surrendering it and paying taxes on the policy’s appreciation. Donating the policy eliminates your tax liability and qualifies for a deduction. The deduction is the lesser of the policy’s cash value or the cost basis (i.e., premiums paid to date).
Another option is to simply change the beneficiary on your life policy to the charity you choose. You won’t receive a tax deduction until the policy pays out after your death, at which point your estate can claim it.
Time
Don’t forget that in many cases you can donate your time instead of money. Seek out charities that need volunteers, from specific skills and expertise to help with cleaning, delivering, and organizing events.
Disclaimer
These articles provide general information on tax, accounting, and financial topics for small businesses and individuals. They are educational in nature and are not specific legal, accounting, financial, tax, or other professional advice, and should not be relied upon as such. This content was prepared by Service2Client and may have been reviewed or edited by the website owner for accuracy and compliance. Look for a trust mark below for verification details. No representation is made that any approach described will achieve a particular result, and no regulatory or professional body has reviewed or endorsed this content. Because each situation is different, readers should consult a qualified professional about their specific circumstances before acting. Images accompanying these articles are protected by copyright and may not be copied or reused.
Young adults may not see much reason to purchase life insurance, especially if they have no dependents and/or a partner who makes plenty of money. However, there are several reasons why folks in this situation would want to consider various forms of life insurance.
To Pay Off Debt
Let’s say your parents cosigned for your student loans, car loan or other debts. Should you pass away, your cosigner will be liable to pay off the debt. However, if you name that person the beneficiary of your life policy, he or she can use the benefit to pay off the debt.
Breadwinner
If you are the breadwinner in your household, imagine how your spouse or partner would fare without your income. By naming that person beneficiary of your life insurance policy, you can leave a death benefit to help cushion the blow. This is particularly important if you have shared debt, such as a mortgage.
Stay-At-Home Parent or Spouse
Even people without a traditional salary should consider life insurance coverage. After all, they may provide services that are expensive to replace, such as cooking, cleaning, shopping, and childcare. Even a small life insurance payout can help a working partner cover these expenses during a difficult time.
To Prepare for Future Needs
There are life insurance policies that work double duty – issue a payout upon death as well as build a savings account. For example, whole life and universal life insurance policies use a portion of the premium to build cash value, which can be used for future expenses like the down payment for a house.
Cheaper Now Than Later
Another good reason to buy life insurance when you’re young is that premiums are lower the younger and healthier you are.
Employer Versus Independent Policy
Many employers offer a basic life insurance policy with the option to increase the death benefit by paying a higher premium. Depending on your circumstances and goals, it may be worthwhile to purchase a life policy separate from your employer. This can give you extra coverage and is portable in case you get laid off or decide to start your own business.
Other Adulting Tips
Start saving and investing for retirement when you’re young. The power of interest compounding over time works the way credit card debt compounds – but in an investment account, the money that compounds belongs to you. This means you can earn a lot more by the time you retire than if you wait until your 30s or 40s to start investing (even if you contribute more at those ages).
If your employer offers a 401(k) plan, take advantage of any free money. Many employers offer matching contributions up to a certain limit, so even if you defer only a small amount of income to your 401(k), your employer will typically double it.
Another good investment vehicle for young adults is the Roth IRA. You can save up to $7,000 a year (2025) in a Roth and tap your contributions at any time for any reason. This makes a great double-duty investment that can also serve as an emergency fund, a short-term savings fund for a new car or down payment for a house, and, ultimately, for retirement. The only taxes you pay are on the net investment gains above your original contributions, and even that is tax-free after age 59½. If you don’t have spare income to contribute to a Roth, remember it’s a good vehicle to open when you receive a raise or a bonus.
Lots of young adults test their potential parenting skills by adopting a pet, and may wonder if it’s worthwhile to buy pet insurance. First of all, shop around for quotes because you may find that it is surprisingly affordable. The next variable to consider is the age of your pet. If you adopt a young pet, premiums will likely be cheape,r and you’ll be able to renew your insurance each year with little problem and reasonable increases. However, if you prefer to adopt an older pet, or a purebred known for significant health issues, you may find premiums are significantly higher and, at some point, you may no longer be able to renew your pet insurance policy. Keep these guidelines in mind when considering whether or not you can afford a pet.
Young Adults: Why Buy Life Insurance?
August 1, 2025 · Blog, Financial Planning, Uncategorized
⏱ 4 min read
Young adults may not see much reason to purchase life insurance, especially if they have no dependents and/or a partner who makes plenty of money. However, there are several reasons why folks in this situation would want to consider various forms of life insurance.
To Pay Off Debt
Let’s say your parents cosigned for your student loans, car loan or other debts. Should you pass away, your cosigner will be liable to pay off the debt. However, if you name that person the beneficiary of your life policy, he or she can use the benefit to pay off the debt.
Breadwinner
If you are the breadwinner in your household, imagine how your spouse or partner would fare without your income. By naming that person beneficiary of your life insurance policy, you can leave a death benefit to help cushion the blow. This is particularly important if you have shared debt, such as a mortgage.
Stay-At-Home Parent or Spouse
Even people without a traditional salary should consider life insurance coverage. After all, they may provide services that are expensive to replace, such as cooking, cleaning, shopping, and childcare. Even a small life insurance payout can help a working partner cover these expenses during a difficult time.
To Prepare for Future Needs
There are life insurance policies that work double duty – issue a payout upon death as well as build a savings account. For example, whole life and universal life insurance policies use a portion of the premium to build cash value, which can be used for future expenses like the down payment for a house.
Cheaper Now Than Later
Another good reason to buy life insurance when you’re young is that premiums are lower the younger and healthier you are.
Employer Versus Independent Policy
Many employers offer a basic life insurance policy with the option to increase the death benefit by paying a higher premium. Depending on your circumstances and goals, it may be worthwhile to purchase a life policy separate from your employer. This can give you extra coverage and is portable in case you get laid off or decide to start your own business.
Other Adulting Tips
Start saving and investing for retirement when you’re young. The power of interest compounding over time works the way credit card debt compounds – but in an investment account, the money that compounds belongs to you. This means you can earn a lot more by the time you retire than if you wait until your 30s or 40s to start investing (even if you contribute more at those ages).
If your employer offers a 401(k) plan, take advantage of any free money. Many employers offer matching contributions up to a certain limit, so even if you defer only a small amount of income to your 401(k), your employer will typically double it.
Another good investment vehicle for young adults is the Roth IRA. You can save up to $7,000 a year (2025) in a Roth and tap your contributions at any time for any reason. This makes a great double-duty investment that can also serve as an emergency fund, a short-term savings fund for a new car or down payment for a house, and, ultimately, for retirement. The only taxes you pay are on the net investment gains above your original contributions, and even that is tax-free after age 59½. If you don’t have spare income to contribute to a Roth, remember it’s a good vehicle to open when you receive a raise or a bonus.
Lots of young adults test their potential parenting skills by adopting a pet, and may wonder if it’s worthwhile to buy pet insurance. First of all, shop around for quotes because you may find that it is surprisingly affordable. The next variable to consider is the age of your pet. If you adopt a young pet, premiums will likely be cheape,r and you’ll be able to renew your insurance each year with little problem and reasonable increases. However, if you prefer to adopt an older pet, or a purebred known for significant health issues, you may find premiums are significantly higher and, at some point, you may no longer be able to renew your pet insurance policy. Keep these guidelines in mind when considering whether or not you can afford a pet.
Disclaimer
These articles provide general information on tax, accounting, and financial topics for small businesses and individuals. They are educational in nature and are not specific legal, accounting, financial, tax, or other professional advice, and should not be relied upon as such. This content was prepared by Service2Client and may have been reviewed or edited by the website owner for accuracy and compliance. Look for a trust mark below for verification details. No representation is made that any approach described will achieve a particular result, and no regulatory or professional body has reviewed or endorsed this content. Because each situation is different, readers should consult a qualified professional about their specific circumstances before acting. Images accompanying these articles are protected by copyright and may not be copied or reused.
With the global digital payments market expected to see north of $20 trillion in transaction value in 2025, according to Statista, business-to-business transactions are undoubtedly going to see some action. Debit notes are one tool that businesses have to record their transactions and corresponding payments. Understanding what debit notes are and how they work is essential for a smooth transaction.
Defining Debit Notes
A debit note is a form that advises a vendor’s customer of any outstanding balances owed. It can either let the customer know of an upcoming invoice or advise them of an outstanding payment. Similarly, customers can use debit notes to document the return of goods that are damaged or otherwise unsatisfactory, including the projected credit for a future order.
Understanding Debit Note Uses
Debit notes are used between commercial entities through transactions that involve the supplier sending the customer goods before payment is made. Although the goods have physically moved and payment hasn’t been remitted until an invoice is sent and ultimately satisfied by the customer, a debit note communicates that the merchant has debited the customer’s ledger.
While it’s primarily used by companies that either produce goods or act as warehouse operators, if a business sublets some of its warehouse space, debit notes can communicate upcoming bills to its commercial tenants, even though it’s not its primary business. They can also be used by businesses to fix invoice mistakes. If overbilling has occurred, a debit note can be used to correct the imbalance.
These documents can provide a window for the customer to send back the goods before payment is submitted. It can be as simple as using a postcard to document the outstanding debt to the buyer. While it’s completely optional and only used by certain businesses, buyers can request one for their own record-keeping purposes. Usually used by commercial or business-to-business entities, a debit note (or credit note) is entered into the business’ accounting records to track amounts due.
It’s important to distinguish the differences between a debit note and a credit note. Debit notes add to the purchaser’s liability and inform the purchaser of their new debt to the vendor. In contrast, credit notes lower the buyer’s liability, permitting the buyer to know the scope and amount of the credit for damaged or unsatisfactory goods.
Another reason a debit note is issued is when an order is modified. Other circumstances might include if goods are damaged during production or in transit before inspection (conducted by the vendor); a buyer declines an order; there is a need to correct an order; or a credit note pays for the bill’s value.
Differences with an Invoice
While a debit note communicates the status of a future payment or adjustment to an order, invoices are more detailed. Invoices include the sales details, goods/services provided, individual unit prices, the complete cost, and the contact information for the seller and buyer.
Illustrating How It Works
Let’s say a business uses its credit line to buy 100,000 widgets from another company at an agreed-upon purchase price of $2 each. The supplier drops off the 100,000 widgets and remits the invoice for $200,000 to the business. However, the business received 20,000 widgets in unsatisfactory condition (damaged, etc.).
When this happens, the purchasing company creates a debit note and sends it to the supplier upon receipt of the damaged 20,000 widgets. This action will lead to an adjustment, debiting the amount owed of $40,000.
In this case, the transactions will be accounted for as follows:
n Seller debits its accounts receivable by $40,000
n Buyer will credit its accounts payable for $40,000
While this demonstrates how it works, it also shows that debit notes can be powerful tools for both buyers and sellers.
Conclusion
When it comes to debit notes, businesses and commercial customers of other businesses can leverage this tool to ensure they’re adjusting current and future orders.
How to Account for Debit Notes
August 1, 2025 · Accounting News, Blog, Uncategorized
⏱ 4 min read
With the global digital payments market expected to see north of $20 trillion in transaction value in 2025, according to Statista, business-to-business transactions are undoubtedly going to see some action. Debit notes are one tool that businesses have to record their transactions and corresponding payments. Understanding what debit notes are and how they work is essential for a smooth transaction.
Defining Debit Notes
A debit note is a form that advises a vendor’s customer of any outstanding balances owed. It can either let the customer know of an upcoming invoice or advise them of an outstanding payment. Similarly, customers can use debit notes to document the return of goods that are damaged or otherwise unsatisfactory, including the projected credit for a future order.
Understanding Debit Note Uses
Debit notes are used between commercial entities through transactions that involve the supplier sending the customer goods before payment is made. Although the goods have physically moved and payment hasn’t been remitted until an invoice is sent and ultimately satisfied by the customer, a debit note communicates that the merchant has debited the customer’s ledger.
While it’s primarily used by companies that either produce goods or act as warehouse operators, if a business sublets some of its warehouse space, debit notes can communicate upcoming bills to its commercial tenants, even though it’s not its primary business. They can also be used by businesses to fix invoice mistakes. If overbilling has occurred, a debit note can be used to correct the imbalance.
These documents can provide a window for the customer to send back the goods before payment is submitted. It can be as simple as using a postcard to document the outstanding debt to the buyer. While it’s completely optional and only used by certain businesses, buyers can request one for their own record-keeping purposes. Usually used by commercial or business-to-business entities, a debit note (or credit note) is entered into the business’ accounting records to track amounts due.
It’s important to distinguish the differences between a debit note and a credit note. Debit notes add to the purchaser’s liability and inform the purchaser of their new debt to the vendor. In contrast, credit notes lower the buyer’s liability, permitting the buyer to know the scope and amount of the credit for damaged or unsatisfactory goods.
Another reason a debit note is issued is when an order is modified. Other circumstances might include if goods are damaged during production or in transit before inspection (conducted by the vendor); a buyer declines an order; there is a need to correct an order; or a credit note pays for the bill’s value.
Differences with an Invoice
While a debit note communicates the status of a future payment or adjustment to an order, invoices are more detailed. Invoices include the sales details, goods/services provided, individual unit prices, the complete cost, and the contact information for the seller and buyer.
Illustrating How It Works
Let’s say a business uses its credit line to buy 100,000 widgets from another company at an agreed-upon purchase price of $2 each. The supplier drops off the 100,000 widgets and remits the invoice for $200,000 to the business. However, the business received 20,000 widgets in unsatisfactory condition (damaged, etc.).
When this happens, the purchasing company creates a debit note and sends it to the supplier upon receipt of the damaged 20,000 widgets. This action will lead to an adjustment, debiting the amount owed of $40,000.
In this case, the transactions will be accounted for as follows:
n Seller debits its accounts receivable by $40,000
n Buyer will credit its accounts payable for $40,000
While this demonstrates how it works, it also shows that debit notes can be powerful tools for both buyers and sellers.
Conclusion
When it comes to debit notes, businesses and commercial customers of other businesses can leverage this tool to ensure they’re adjusting current and future orders.
Disclaimer
These articles provide general information on tax, accounting, and financial topics for small businesses and individuals. They are educational in nature and are not specific legal, accounting, financial, tax, or other professional advice, and should not be relied upon as such. This content was prepared by Service2Client and may have been reviewed or edited by the website owner for accuracy and compliance. Look for a trust mark below for verification details. No representation is made that any approach described will achieve a particular result, and no regulatory or professional body has reviewed or endorsed this content. Because each situation is different, readers should consult a qualified professional about their specific circumstances before acting. Images accompanying these articles are protected by copyright and may not be copied or reused.
Receiving restricted stock units (RSUs) may seem straightforward, but the tax and financial planning complexities can catch many employees off guard. Understanding these key strategies might help you avoid costly mistakes and optimize your financial outcomes.
1. Manage Tax Withholding at Vesting
The most common pitfall with RSUs is inadequate tax withholding when shares vest. Companies typically withhold taxes at a flat 22 percent rate for federal taxes (37 percent for amounts over $1 million annually), but this often falls short of your actual tax obligation. Financial planners identify this as the biggest issue they see with RSU clients. Many are surprised by large tax bills because the withholding didn’t cover their full liability.
Managing proper tax withholding is often the primary focus of RSU planning. The challenge becomes even more complex when stock prices are volatile, making it difficult to predict exact tax obligations.
Higher RSU income increases the likelihood of under-withholding. When shares can’t be sold to cover additional taxes, alternative payment methods must be planned. Quarterly estimated taxes are one option, though this becomes complicated when the current year income differs significantly from the prior year.
The most effective approach is to conduct quarterly tax projections or work with a CPA to maintain compliance with safe harbor requirements for federal taxes throughout the year.
2. Comprehensive RSU Planning Questions
While RSUs appear simpler than stock options due to their fixed vesting schedules, this perception can be misleading. Financial advisors warn that numerous organizational details can create problems without proper planning.
Key planning considerations include potential state moves during vesting periods, which trigger mobility tax issues, and coordination with ESPP purchases and stock option exercises to avoid wash sale complications. Essential questions for RSU planning include understanding personal goals, assessing wealth concentration levels, determining how much needs to be diversified, ensuring spouse awareness of concentration risks, analyzing the ratio of vested to unvested shares, tracking upcoming vests and trading windows, and evaluating prior year income impacts.
A critical concern is spousal awareness of company stock concentration. Financial planners frequently encounter situations where busy tech employees accumulate significant wealth while their spouses remain unaware that their entire financial security depends on one company’s stock performance.
3. Reduce Taxable Income During Vesting Years
Beyond harvesting capital losses, several strategies can reduce your overall tax burden in years when RSUs vest. These include maximizing 401(k) deferrals, funding Health Savings Accounts, participating in nonqualified deferred compensation plans if available, and donating appreciated company stock to donor-advised funds to exceed standard deduction thresholds.
4. The Hold Versus Sell Decision
Once RSUs vest and you own the shares, deciding whether to hold or sell becomes crucial. Financial advisors routinely recommend selling RSU shares immediately upon vesting, before significant price fluctuations occur. This recommendation is particularly strong for clients already holding substantial company stock positions, as additional concentration increases unnecessary risk.
Many clients choose to sell immediately and deploy proceeds toward other financial goals. This approach helps diversify their overall portfolio and reduces company-specific risk.
5. Navigate Trading Windows
RSU selling plans must account for company trading windows, which dictate when employees can sell shares. Understanding these restrictions is essential for effective RSU management.
When advisors recommend selling RSUs at vesting, they don’t mean selling on the exact vesting date. Instead, they mean selling when trading windows permit, typically after earnings calls. These windows usually last four to six weeks, and while exact dates can’t be predicted far in advance, historical patterns provide reasonable estimates.
Financial planners coordinate clients’ RSU vesting schedules with anticipated trading windows to develop realistic selling strategies. This coordination ensures clients can execute their plans within company restrictions while maintaining compliance with insider trading rules and any existing 10b5-1 trading plans.
Conclusion
Proper RSU planning requires understanding these interconnected elements and developing strategies that align with your broader financial goals while managing tax implications effectively.
Restricted Stock Units: 5 Essential Tax and Financial Planning Strategies
August 1, 2025 · Blog, Tax and Financial News, Uncategorized
⏱ 4 min read
Receiving restricted stock units (RSUs) may seem straightforward, but the tax and financial planning complexities can catch many employees off guard. Understanding these key strategies might help you avoid costly mistakes and optimize your financial outcomes.
1. Manage Tax Withholding at Vesting
The most common pitfall with RSUs is inadequate tax withholding when shares vest. Companies typically withhold taxes at a flat 22 percent rate for federal taxes (37 percent for amounts over $1 million annually), but this often falls short of your actual tax obligation. Financial planners identify this as the biggest issue they see with RSU clients. Many are surprised by large tax bills because the withholding didn’t cover their full liability.
Managing proper tax withholding is often the primary focus of RSU planning. The challenge becomes even more complex when stock prices are volatile, making it difficult to predict exact tax obligations.
Higher RSU income increases the likelihood of under-withholding. When shares can’t be sold to cover additional taxes, alternative payment methods must be planned. Quarterly estimated taxes are one option, though this becomes complicated when the current year income differs significantly from the prior year.
The most effective approach is to conduct quarterly tax projections or work with a CPA to maintain compliance with safe harbor requirements for federal taxes throughout the year.
2. Comprehensive RSU Planning Questions
While RSUs appear simpler than stock options due to their fixed vesting schedules, this perception can be misleading. Financial advisors warn that numerous organizational details can create problems without proper planning.
Key planning considerations include potential state moves during vesting periods, which trigger mobility tax issues, and coordination with ESPP purchases and stock option exercises to avoid wash sale complications. Essential questions for RSU planning include understanding personal goals, assessing wealth concentration levels, determining how much needs to be diversified, ensuring spouse awareness of concentration risks, analyzing the ratio of vested to unvested shares, tracking upcoming vests and trading windows, and evaluating prior year income impacts.
A critical concern is spousal awareness of company stock concentration. Financial planners frequently encounter situations where busy tech employees accumulate significant wealth while their spouses remain unaware that their entire financial security depends on one company’s stock performance.
3. Reduce Taxable Income During Vesting Years
Beyond harvesting capital losses, several strategies can reduce your overall tax burden in years when RSUs vest. These include maximizing 401(k) deferrals, funding Health Savings Accounts, participating in nonqualified deferred compensation plans if available, and donating appreciated company stock to donor-advised funds to exceed standard deduction thresholds.
4. The Hold Versus Sell Decision
Once RSUs vest and you own the shares, deciding whether to hold or sell becomes crucial. Financial advisors routinely recommend selling RSU shares immediately upon vesting, before significant price fluctuations occur. This recommendation is particularly strong for clients already holding substantial company stock positions, as additional concentration increases unnecessary risk.
Many clients choose to sell immediately and deploy proceeds toward other financial goals. This approach helps diversify their overall portfolio and reduces company-specific risk.
5. Navigate Trading Windows
RSU selling plans must account for company trading windows, which dictate when employees can sell shares. Understanding these restrictions is essential for effective RSU management.
When advisors recommend selling RSUs at vesting, they don’t mean selling on the exact vesting date. Instead, they mean selling when trading windows permit, typically after earnings calls. These windows usually last four to six weeks, and while exact dates can’t be predicted far in advance, historical patterns provide reasonable estimates.
Financial planners coordinate clients’ RSU vesting schedules with anticipated trading windows to develop realistic selling strategies. This coordination ensures clients can execute their plans within company restrictions while maintaining compliance with insider trading rules and any existing 10b5-1 trading plans.
Conclusion
Proper RSU planning requires understanding these interconnected elements and developing strategies that align with your broader financial goals while managing tax implications effectively.
Disclaimer
These articles provide general information on tax, accounting, and financial topics for small businesses and individuals. They are educational in nature and are not specific legal, accounting, financial, tax, or other professional advice, and should not be relied upon as such. This content was prepared by Service2Client and may have been reviewed or edited by the website owner for accuracy and compliance. Look for a trust mark below for verification details. No representation is made that any approach described will achieve a particular result, and no regulatory or professional body has reviewed or endorsed this content. Because each situation is different, readers should consult a qualified professional about their specific circumstances before acting. Images accompanying these articles are protected by copyright and may not be copied or reused.
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Receiving restricted stock units (RSUs) may seem straightforward, but the tax and financial planning complexities can catch many employees off guard. Understanding these key strategies might help you avoid costly mistakes and optimize your financial outcomes.