Cuddy Financial Services's Tax Planning Guide

Daniel R. Cuddy, CPA, CFP^®

Personal Financial Representative

Cuddy Financial Services

7 William Street

Auburn, NY 13021

Phone: 315-252-3600

Fax: 315-252-3625

Email: dcuddy@cuddyfinancial.com

2024 Tax Planning Guide

Introduction

Individual taxpayers can breathe a sigh of relief that fewer major tax changes await them in 2024 than they saw in 2023. That’s not to say there aren’t any changes for 2024. While annual inflation adjustments aren’t as dramatic as in 2023, individuals will welcome the higher thresholds for tax brackets and the alternative minimum tax and increases in social security benefits, retirement plan contribution limits, HSA contributions, and other deductions and credits. On the business side, taxpayers need to be aware of new eFiling and reporting requirements, among other tax tweaks.

Also, the IRS plans to allow taxpayers to digitally submit all documents and correspondence to the agency for the 2024 tax filing season. And there are a host of tax proposals in the air that could affect your situation. So, reviewing your investment, estate plan, retirement planning, and business strategies with your tax professional is as important as ever this year. They can help you look at the whole picture and assist you in taking steps to ensure a financially secure future.

We Can Help

Tax regulations are ever-changing and always complex. Working with your tax and financial professionals to learn how to minimize taxes and leverage your savings to invest in your future has never been more important. We urge you to call us to schedule an appointment. Gettinig a head start on tax planning can save your money, time, and stress.

NOTE: The information summarized here is current as of December 11, 2023, but things may change that could impact your tax situation. We urge you to consult your tax professional, who can advise you regarding your personal situation.

Personal Tax Planning

What to Note for 2024

At the top of the list are numerous upward inflation adjustments that affect everything from retirement and estate planning to personal and corporate income tax brackets. We highlight common adjustments here. You can find further details throughout this booklet.

Income Tax Brackets and Rates

All federal income tax brackets are based on taxable income. You can use the IRS tax withholding calculator to see if you’re withholding the right amount for 2024.

Other Taxes on Income

Income tax isn’t the only tax affecting your spendable income. Make a note of these taxes as well.

Tax-Advantaged Healthcare Arrangements

Limits for Health Savings Accounts (HSAs) and High-Deductible Health Plans (HDHPs) are increasing by about 7% for 2024.

Deductions and Credits

Tax credits are subtracted directly from taxes owed, while tax deductions lower your taxable income. The following includes some federal credits and deductions.

Estate Taxes

If you haven’t discussed estate planning opportunities with your legal, tax, and financial professionals yet, why not use this time to schedule a meeting? Even with more generous federal estate tax exemptions, you need to be aware of local estate and inheritance taxes. Although some states have repealed their estate tax statutes and others increased their exemptions recently, a few still have the tax. A handful of states also have an inheritance tax.

Charitable Contributions

Donations of goods to charity are valued at their market value at the time of donation. You can’t claim the price you paid for the item.

Education Planning

Essentially, a 529 plan allows you to invest money with tax-deferred earnings for a child’s higher education. When the time comes, you can make tax-free withdrawals to pay qualified college expenses, such as tuition, room and board, required fees, books, supplies, and computers, for the student.

Plan for Retirement

The steps you take today to prepare for retirement will shape your financial picture during your later years.

Personal Tax Considerations

Do you need to meet with your team of legal, tax, and financial professionals? There are any number of situations in which you might. Not the least of which is having put it off for some time.

Tax Rates and Business Structures

Due to 2022’s Inflation Reduction Act, large businesses — those with more than $1 billion in reported income — have to pay taxes at a minimum corporate rate of 15%. For other C corporations, the tax rate remains a flat 21%. Pass-through companies, including S corporations and limited liability companies (LLCs) also receive more favorable treatment. Whatever structure your company has, now may be a good time to discuss your corporate structure with your tax and legal professionals.

Opportunities for Small Businesses

Small businesses have unique characteristics and needs. Hence, the IRS has some tax provisions that are designed for or may be particularly beneficial to smaller companies.

More Tax-Managing Opportunities

Businesses large and small have numerous other tax-managing opportunities available to them. See which ones fit your business.

Employee Benefits

Review your employee benefit offerings to ensure they continue to maximize potential tax breaks, while providing benefits that attract and retain qualified employees.

Accounting Methods

If your average annual gross receipts were $30 million or less in the three previous tax years, you can choose either a cash or accrual method of accounting in 2024. In 2023, the limit was an average of $29 million or less.

Business Tax Considerations

Whether dealing with a pandemic or fighting the erosive effects of inflation, business owners need to plan. Here’s a checklist of practical considerations. Talk to your tax professional for a complete list of documents you’ll need to bring to your next tax-planning meeting.

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