Tax Changes and Planning for Them
It’s that time of the year where businesses & individuals circle the wagons to begin planning for taxes. A good plan can pinpoint tax savings opportunities. It helps business owner’s make smart decisions and gives everyone peace of mind knowing how the chips will lay come April. IRS updates and adjustments for inflation always play a key role in tax planning, and here’s a quick breakdown:
Standard Deduction
The Standard Deduction continues to make a habit of climbing since 2017. This year, it has increased to $14,600 for single filers and $29,200 for married couples filing jointly. At these levels, itemizing is a rarity. To do so, the combination of the taxpayers' expenses for real estate taxes, mortgage interest & charitable donations would all need to add up to exceed the amount of your Standard Deduction. To make it even harder the deduction for SALT remains capped at $10,000. So, every real estate tax dollar that you pay over that won’t be counted.
Tax Brackets
Tax Brackets increase for inflation in 2024 and are as follows:
Retirement Contributions
Maximum retirement contributions to a 401(k) or (b) are now $23,000. If you contribute to a Traditional or Roth IRA that amount is now $7,000. The catch-up contributions for individuals 55 or older are $7,500 to 401(k) or (b), and $1,000 to the IRA.
Business Changes
Beneficial Ownership Information Reporting (BOI Report)
In 2024, There is a new filing requirement in 2024 for LLCs, and many folks are being caught off guard. Who all is affected? Nearly everyone with an LLC. And the penalty for noncompliance is $500/day up to $10,000!
For a more detailed article on the BOI Report, and if you'd like our help being compliant, please Click HERE.
Standard Mileage Rate
The standard mileage rate went up to 67 cents per mile which is its highest percentage ever.
Bonus Depreciation
Since 2017, Bonus Depreciation has allowed a 100% deduction for qualifying assets. That percentage begins to throttle down. In 2024 it’s 60% and is further reduced by 20% in each subsequent year until completely phasing out in 2027. This plays a much larger role when it comes to tax planning because you may be able to take Section 179 on that same property. Section 179 cannot create a loss but may help to further reduce taxable income to $0.
Things to Note
Earned Income Tax Credit (EITC)
The Earned Income Credit is often overlooked by taxpayers that would have qualified! This is a HUGE credit to miss out on! In 2024 the maximum Earned Income Tax Credit amount is $7,830 for qualifying taxpayers. There are several things that affect the credit, but the main qualification is to have earned income within a certain range (Under $63,398). The other two factors are having children, and/or being disabled.
Be sure you don’t miss out! The IRS has a very handy tool where you can check to see if you qualify even before logging on to file your own taxes or prior to submitting them to RANGEVIEW for preparation. Click HERE to check out the tool.
Tax Planning
RANGEVIEW puts our clients first and we're committed to helping them achieve financial success! That all starts with planning and is a service we offer in the Fall! Click Here for my article discussing Tax Planning in greater detail. Get the peace of mind of having a plan in place!
Book a Free Discovery Appointment
See if Rangeview Tax & Accounting is a good fit for you with a Free Discovery Chat! We offer in-person and telephone/zoom discovery chats. On site chats are typically business with exceptions available under appropriate circumstances for individuals.
Book a Paid Consultation
Our paid consultation is $100 and puts you on the line with a tax professional who will answer questions that you have related to IRS Code, and Tax Strategies. Pay for your consultation, select one of the available appointments, and provide the general topic of discussion or questions that you wish to discuss.
Tax Projections
Stay on top of the upcoming filing season with a tax projection! We will collect various data including current pay stubs, expected business income, and more extraordinary situations like selling a home, rental, or business. From there we annualize the figures and run a mock tax return to get a good idea of an expected tax liability. This gives us a baseline in which we can further advise tax planning strategies that may apply.
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