RECENT NEWS

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Tax Season 2024-2025
January 2025

Dear Valued Client and Friend,

Happy New Year to each of you and thank you very much for your support over the years.

Let's make this the best year ever as we work our way through the upcoming 2024 tax filing year.

We can start e filing business tax returns on Thursday January 16th this year. Personal tax returns can be e filed by the fourth week of January.

The State of California and the IRS have extended the date for filing to October 15 this year for all of Los Angeles County because of the fire victims. Please forward your tax documents as soon as possible to avoid the rush later this year and to plan for the 2025 year.

OBSERVATIONS AND SUGGESTIONS:

I do not anticipate and do not expect changes in the tax laws before year end. 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. I expect these reductions to be renewed. Top rates would remain at 37% and possibly lower. All rates would be affected.

1.  You should have already received your 2024 Tax Organizers. If not, please contact the office and we will resend to you. You can contribute, before the tax due date, $7,000 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 $23,000 with a $7,500 catch up. You can contribute to a SEP-IRA retirement account all the way to the extension date. Those that are between 60-63 years old can contribute a catch up amount up to $11,250. The maximum for SEP-IRA or Self Employed 401-K is $69,000.

WE NOW HAVE 74% OF AMERICANS THAT ARE RETIRED BY THE AGE OF 64 WITHOUT ADEQUATE RETIREMENT FUNDS.

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. There is no charitable deduction if you don't itemize.

4.  If you are 72 years or older, donations of up to $100,000 as part of your Required Minimum Distribution are not taxable as a Qualified Charitable Distribution (QCD). No taxable income but also no charitable deduction.

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 S.A.L.T. $10,000 limitation when you itemize. State of California allows you to take a credit for this added income tax if you pay by the due date of business return without an extension.

6.  Long term capital gains are taxed at a lower capital tax rate than short term for assets held less than one year. If single, the capital gains tax rate is $0 if your other income is less than $47,025. If married filing jointly, $0 capital gain taxes if income under $94,050.

7. Our first year using Docusign was successful but make sure you send back in the signed and dated authorized forms for e filing 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. We prefer payment for services before we file for you.

8.  Gifting to family or friends is limited to $18,000 in 2024 and $19,000 in 2025. Gifts are not deductible for you and not income to the recipient.

9.  There are more tax credits this year for home improvements and repairs. There is still a $2,000 tax credit for children under 17 and still a $500 tax credit for other dependents.

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.
2. If not enough, you can also make an estimated quarterly payment 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 the charity of your choice. Keep track of the date of the donation, what you gave, and its Fair Market Value. 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 529 plan for your children or grandchildren if you have the funds.
3. Contact us if you need insurance; whether it is term or whole life. Annuities are a good way to save that extra income for retirement.
4. We can review poorly performing investments for you. Dollar cost average money each month for your retirement account. The government, even with Social Security, will not be enough to maintain any semblance of your current lifestyle even with modifications.

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

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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......READ MORE...