Happy Holiday Season!
Congress pretty much ignored the tax code this year since they were, you know, busy trying to get reelected. That’s good news for this tax season but hang on – next year could be a wild ride with many provisions from the 2018 tax code revisions coming up for renewal.
Reminder for business owners – if you are registered with your Secretary of State, you probably should go to www.FINCEN.gov/BOI to report your business “beneficial ownership information” – basically, who owns the business. I say probably because a Federal Judge agrees with us that this is none of their business and placed a temporary stay on the order. But (my fav quote: “everything before the but is BS”), the penalty for not doing this before Dec 31, 2024 is severe! Like $10k+ severe, so we recommend caving and giving the Fed your info.
Everyone looking for tax breaks this year, here are some reminders of what you can do before January 1 to reduce your 2024 tax bite.
- Donations – If you still are itemizing: Clean out your closets and get those bags to Salvation Army or Goodwill. Buy/donate toys to Goodwill, Toys for Tots, Salvation Army, or another recognized charity. Write checks to the charities dear to your heart. Whatever you do, KEEP THE RECEIPTS! Charitable donations have become a favorite audit item at the IRS.
- Flex-Spending Accounts – USE IT OR LOSE IT! Although the rules have loosened a bit, you still have to use up most of the money set aside from your paycheck for child-care or medical expenses by the end of the year. Some employer plans allow you to rollover some of your unused FSA funds to 2025, so check with your employer for details.
- Capital Gains – The Stock Market continues to be erratic, so now is a good time to review your winners and losers. Remember that you are limited to a maximum of $3,000 of capital loss in any one year, so if you had net stock losses of $5,000, you can claim only $3,000 this year and have to carry the balance to next year’s return. Consider selling one of your winners and use the gain to offset your losses.
- Self Employed – Businesses can invest up to $1 million in new equipment and write it off in the year the equipment was bought AND PUT INTO SERVICE, (up to the amount of your net profit), so if you are going to buy that new piece of machinery before December 31, make sure you put it to business use by December 31. If you buy it and it gets delivered on January 2, it won’t help you on your 2024 tax return! NOTE: Bonus Depreciation dropped to 60% for 2024.
- Gifting – The annual gift tax limit for 2024 is $18,000 per person. If you and her Mom gave your daughter a car for graduation last May, I hope it cost less than $36,000!
- Required Minimum Distributions – The age for when you must begin withdrawing a Required Minimum Distribution has increased in 2023. If you turned 72 before December 31, 2022, you must pay tax on an RMD of your IRAs and 401Ks. BUT, as of January 1, 2023, you don’t owe tax on a Required Minimum Distribution until you turn 73.
Big Announcement! Tax Facts has a new owner, Balaji Polepalli Ramesh. Most of you know that Penny “sort of retired” a few years ago, and now it’s time for Ed and me to join her. We spent a great deal of time and effort searching for the right person to continue servicing your accounting and tax needs. Balaji has years of experience and comes from a “tax family” similar to ours, so we are confident you are in good hands. We, and most of the Tax Facts staff you are familiar with, will be working with Balaji through the end of tax season and likely beyond to make certain the transition goes smoothly for everyone.
As always, please feel free to call or email us if you have any tax related questions or concerns.