NEWS & UPDATES

​​​​​IRS Updates for October: What You Need to Know

1. Key Tax Law Changes for 2024

The IRS has made several adjustments to tax laws in response to ongoing economic shifts and legislative changes. For the 2024 tax year, these are the major highlights:

• Increased Standard Deduction: The IRS has increased the standard deduction for the 2024 tax year to account for inflation. The new deduction amounts are $13,850 for single filers and $27,700 for married couples filing jointly. This increase means that more taxpayers will benefit from taking the standard deduction, simplifying their filing process.

• Changes to Marginal Tax Rates: While the tax brackets remain largely similar, there have been slight adjustments to accommodate inflation. These adjustments ensure that taxpayers' incomes are taxed at the appropriate rate without being penalized by inflation. Sellers CPA recommends reviewing your income projections for the year to understand how these changes might affect your tax liability.

• Contribution Limits for Retirement Accounts: For those looking to maximize their retirement savings, the IRS has increased the contribution limits for 401(k) and IRA accounts. In 2024, the 401(k) contribution limit is raised to $23,000, while the catch-up contribution for individuals over 50 rises to $7,500. The traditional and Roth IRA contribution limits remain the same at $6,500, with an additional $1,000 for catch-up contributions.

• Tax Credits for Green Energy: The IRS continues to encourage investments in energy-efficient upgrades through expanded tax credits. Homeowners can now claim credits for solar panels, energy-efficient windows, and other environmentally friendly improvements. Businesses investing in clean energy can also benefit from enhanced tax incentives, especially in light of the Inflation Reduction Act.

2. Upcoming Filing Deadlines

• As we approach the end of the calendar year, it’s essential to keep an eye on several critical tax deadlines:

• October 16, 2024 – Extended Deadline for 2023 Tax Returns: For individuals and businesses that filed for an extension, the deadline to submit your 2023 federal tax return is fast approaching. Sellers CPA can assist you with any last-minute adjustments or filing needs. It’s also a good time to review your state tax filing deadlines, as these may differ.

• November 1, 2024 – Q3 Estimated Tax Payment: For those who are self-employed or have income that isn’t subject to withholding, the third quarter estimated tax payment deadline is on November 1. It’s important to ensure your estimated taxes are in line with your earnings to avoid penalties. Sellers CPA can help you calculate these payments accurately.

• 3. Inflation-Adjusted Tax Thresholds Inflation has a significant impact on several tax thresholds, and the IRS has adjusted these numbers accordingly for the 2024 tax year:

• Estate and Gift Tax Exemption: The lifetime estate and gift tax exemption has been increased to $13.92 million per individual, up from $12.92 million. This increase provides more flexibility for high-net-worth individuals looking to transfer wealth to the next generation. Sellers CPA offers specialized estate planning services to help you take advantage of this increased exemption.

• Earned Income Tax Credit (EITC): The maximum amount for the EITC has increased slightly, with qualifying families with three or more children able to claim up to $7,430. Income limits for the EITC have also been adjusted, so it’s important to verify your eligibility when filing your 2024 taxes.

• AMT (Alternative Minimum Tax) Exemption: The AMT exemption for 2024 has been raised to $84,800 for individuals and $126,500 for married couples filing jointly. This adjustment ensures that fewer taxpayers will be subject to the AMT, but it’s important to review your income and deductions to determine if you fall under the AMT threshold.

Proactive Tax Planning Strategies for Year-End

With the IRS updates in mind, October is a prime time to evaluate your tax strategy for the remainder of the year. Sellers CPA encourages individuals and businesses to take the following steps to minimize their tax liabilities and maximize deductions:

• 1. Harvest Capital Losses For investors, reviewing your portfolio for capital gains and losses is essential before year-end. If you have realized gains during the year, you may want to sell off some underperforming investments to offset those gains and reduce your overall tax liability. This strategy, known as tax-loss harvesting, can be particularly beneficial in volatile markets. Sellers CPA can assist with reviewing your investment portfolio to identify opportunities for tax savings.

• 2. Review Your Retirement Contributions Maximizing your retirement contributions is one of the most effective ways to lower your taxable income. If you haven’t yet reached the contribution limits for your 401(k) or IRA, now is the time to increase those contributions. Sellers CPA can help you understand the tax implications of various retirement account contributions and identify the best strategy for your financial situation.

• 3. Charitable Contributions Making charitable donations before the end of the year can provide significant tax benefits. Whether you’re donating cash, stocks, or other assets, you may be able to claim a deduction for these contributions. Keep in mind that charitable deductions are only available to taxpayers who itemize their deductions. Sellers CPA can guide you on how to optimize your charitable giving to maximize the tax benefits.

• 4. Maximize Business Deductions If you’re a business owner, year-end is a critical time to review your business expenses and take advantage of any available deductions. Consider purchasing equipment, upgrading technology, or prepaying expenses for the upcoming year to reduce your taxable income for 2024. Sellers CPA specializes in helping business owners identify opportunities to maximize deductions while maintaining compliance with IRS regulations.

• 5. Evaluate Your Estate Plan With the increased estate and gift tax exemption, now is a good time to review your estate plan and ensure that your wealth transfer strategies are optimized. Whether you’re considering gifting assets to family members or establishing trusts to protect your legacy, Sellers CPA can help you navigate the complexities of estate planning and ensure that your plan aligns with current tax laws.

Looking Ahead: Preparing for 2025 Tax Changes

While it’s important to focus on the current tax year, planning ahead for potential changes in 2025 is equally critical. With discussions of potential tax reforms and legislative changes on the horizon, taxpayers should be prepared for adjustments that may impact their financial situation.

• 1. Anticipated Expiration of Tax Cuts and Jobs Act (TCJA) Provisions Many provisions of the TCJA are set to expire at the end of 2025 unless Congress takes action to extend them. Key provisions include the current marginal tax rates, the higher standard deduction, and the increased estate tax exemption. Sellers CPA recommends proactive tax planning to prepare for the potential expiration of these provisions and to minimize any negative impact on your financial situation.

• 2. Potential Changes to Retirement Plan Rules Congress is also considering adjustments to retirement plan rules, including possible increases to contribution limits and changes to required minimum distributions (RMDs). As these discussions evolve, Sellers CPA will continue to monitor the situation and provide updates to help you plan accordingly.

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How Sellers CPA Can Help You Stay Ahead

At Sellers CPA, we understand that tax laws are constantly evolving, and it can be challenging to keep up with all the changes. That’s why we’re committed to providing personalized tax planning services that are tailored to your unique financial situation. Our team of experienced professionals stays up-to-date on the latest IRS updates and tax law changes to ensure that you receive the most accurate and effective guidance.

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Whether you’re an individual looking to minimize your tax liability or a business owner seeking to maximize deductions and credits, Sellers CPA has the expertise and knowledge to help you succeed.

Our services include:

• Individual and Business Tax Planning: We’ll work with you to develop a comprehensive tax strategy that aligns with your financial goals.

• Estate Planning: Protect your legacy and ensure that your wealth is transferred efficiently with our estate planning services.

• IRS Representation: If you’re facing an audit or other IRS issues, Sellers CPA can provide expert representation to resolve the matter quickly and efficiently.

• Business Consulting: From tax planning to financial analysis, our business consulting services help you navigate the complexities of running a successful business.

As we move into the final quarter of the year, now is the time to take control of your tax planning. Contact Sellers CPA today to schedule a consultation and ensure that you’re fully prepared for the upcoming tax season.

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Stay tuned for next month’s newsletter, where we’ll provide even more valuable insights to help you navigate the world of taxes and financial planning.

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Sellers CPA
Your Trusted Partner in Tax and Financial Planning
Visit us online at sellerscpa.net for more information.