RECENT NEWS

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End of Summer and Year End Tax and Financial Planning
October 2024

Enjoy this wonderful time of the year with your family and friends. Savor the food, memories and do good in this troubled world.

Thank you for being loyal clients over the years and a special thanks to all the new clients. I look forward to assisting you now with year end tax planning, advice and tax preparation for 2024. Time to move on now from 2023.

Remember to be thankful and grateful for living in this great country. Make sure you vote.

OBSERVATIONS AND SUGGESTIONS:

I do not anticipate any changes in the tax laws before year end, with this being an election year. However, as always, let no man rest while Congress is in session.

The reduction in taxes from the 2017 Tax Cuts and Jobs Act is due to expire at the end of 2025 unless Congress acts after the election. Top rates would revert to 39.6% from current 37%. All rates would be affected.

Tax software for filing this year will be available in the middle of January. We will be sending our tax organizers to you before Christmas.

1. You can contribute, before the tax due date, $8,000 to IRA with a $1,000 catch up if over 50 years old. If you are in a company that has a 401-K plan this could affect the IRA. Same dollar amounts for ROTH IRA which are not tax deductible. Income limits may apply. The 401-K is limited to $23,500 with a $7,500 catch up. You can contribute to a SEP-IRA retirement account all the way to the extension date. ​

2. If you are scheduled to make estimated tax payments make sure you make them even if on different dates. If you cannot pay all of them, still try to pay something to avoid tax bite when you file. 

3. Standard deductions increased to $14,600 for single filers and $29,200 for joint filers. See if itemizing or standard deduction is better.

4. If you are 72 years or older, donations of up to $100,000 as part of your Required Minimum Distribution is not taxable as a Qualified Charitable Distribution.

5. If you have a business, make sure you're accounting for all of your expenses. Don't wait until the last minute. Remember you should have a Balance Sheet in addition to an Income Statement. If you are a passthrough entity, have the Partnership or S corporation pay your state income taxes and thus avoiding the $10,000 limitation when you itemize.

6. Long term capital gains are taxed at a lower capital tax rate than short term for assets held less than one year.

7. Our first year using Docusign here at the office was successful, but make sure you send back in the signed and dated e-file authorization forms that are part of your PDF copy. We cannot e-file until these forms are signed. Let us know if you have to come into our office and if you want a hard copy.

8. Gifting to family or friends is limited to $18,000 in 2024. Gifts are not deductible.

Taxes can go up if you changed jobs, were involved in a gig business, side hustle or there were no withholdings on earned income. Be careful if you receive payments in cash.

Remember that our federal tax system is; pay as you go.

1. Make sure you check on your withholdings. If not enough, then make changes with your employer.
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2. If not enough, you can also make estimated quarterly payments before you file.

The IRS has a handy Estimator to calculate your estimated taxes. Go to IRS.gov. We are also available to help.

You are required to file a reasonable tax return not a perfect tax return.

Keep track of your income and expenses while reconciling your bank accounts each month for accuracy. If you do not have a system in place for your accounting, purchase some accounting software to help you.

A great way to save on taxes and an excellent social policy is to give both cash and merchandise to a charity of your choice. Keep track of the date of donation, what you gave and its Fair Market Value (FMV). The FMV should not be more than 1/3 of your cost. If brand new, then the full value is deductible. Consider bunching your charity all in one year if your income is high this year.

You cannot take a deduction if you don't itemize your deductions; meaning you take the standard deduction amount.

FINANCIAL PLANNING

1. If you do not have a Trust, consider setting one up. Especially if you are over 50 years old. A trust is a contract and will help prevent the state from spending/allocating your hard earned wealth.

2. Invest in a college savings plan for your children or grandchildren if you have the funds.

3. Contact us if you need term or whole life insurance. Annuities are a good way to save that extra income for retirement.

4. We can review poorly performing investments for you.

Please make sure you contact us before you make major financial decisions that can affect your wealth. It could save you thousands of dollars!

We are here to help you with your planning and questions.
Please contact us at 310-374-8832.

Thank you for trusting us.

Sincerely,
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Chuck Anderson
Chuck Anderson, C.P.A., Inc.
[email protected]

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