Dear Clients,

 

As we approach the year-end, we are pleased to present our annual tax planning insights for your consideration. The financial landscape has seen slight changes in 2024, and we aim to provide you with essential updates and recommendations.

 

Look out for your appointment confirmation and questionnaire arriving by January 5 or sooner.

 

Please take a moment to review the letter of tax updates and changes below.  Don’t hesitate to reach out with any questions or concerns.

 

 

Happy Holidays and have a wonderful New Year!

 

Sincerely,

 

Rich McKay

801-731-1857

RMcKay@McKayTax.com

 

Please note that this information is for educational purposes and should not be relied upon for accounting, legal, insurance, or investment advice. Tax laws may change, so consult a professional for the latest guidance.

 

 

2024 and 2025 Tax Planning

 

2024 Standard Deductions

 

In 2024, the standard deductions were $14,600 for single filers, $21,900 for the Head of Household, and $29,200 for those filing as Married/Jointly. If you are over 65 or blind, you can add additional amounts per person for single or head of household ($1,950), and others can add $1,550.

 

The standard deductions for 2025 will increase to $ $15,000, and $22,500, and $30,000 respectively.

 

2024 Tax Brackets

 

For Single Filers:

– Taxable income under $11,925 is taxed at 10%.

– Taxable income under $48,475 is taxed at 12%.

– Taxable income under $103,350 is taxed at 22%.

– Taxable income under $197,300 is taxed at 24%.

– Taxable income under $250,525 is taxed at 32%.

– Taxable income under $626,350 is taxed at 35%.

– Taxable income over $626,350 is taxed at 37%.

 

For Married Joint Filers:

– Taxable income under $23,850 is taxed at 10%.

– Taxable income under $96,950 is taxed at 12%.

– Taxable income under $206,700 is taxed at 22%.

– Taxable income under $394,600 is taxed at 24%.

– Taxable income under $501,050 is taxed at 32%.

– Taxable income under $751,600 is taxed at 35%.

– Taxable income over $751,600 is taxed at 37%.

 

For Head of Household Filers:

– Taxable income under $17,000 is taxed at 10%.

– Taxable income under $64,850 is taxed at 12%.

– Taxable income under $103,350 is taxed at 22%.

– Taxable income under $197,300 is taxed at 24%.

– Taxable income under $250,500 is taxed at 32%.

– Taxable income under $626,350 is taxed at 35%.

– Taxable income over $625,350 is taxed at 37%.

 

In 2024, due to inflation, more income will be taxed at lower levels, resulting in lower taxes.

 

2024 Child Tax Credit

 

The Child Tax Credit remains unchanged at $2,000 for dependents under 17 and $500 for dependents over 16 for 2024 and 2025

 

2024 Energy Credits

 

– Electric Vehicles: Many new EVs qualify for a credit of up to $7,500. With some limitations, the break is up to $4,000 if buying a used EV.

– Residential Clean Energy Property: A 30% non-refundable credit is available for new solar, wind, geothermal, or fuel cell technology.

– Energy-Efficient Home Improvement Credit: This credit applies to various eco-friendly upgrades, with a general $1,200 yearly credit limit.

 

Year-End Tax Planning

 

Here are some key considerations for year-end tax planning:

 

Charitable Donations

 

If you plan to itemize deductions, make your charitable donations before December 31. Keep detailed receipts with itemized values for each donated item. Consider bunching donations to maximize deductions in specific years.

 

Flex-Spending Accounts

 

Review and allocate your Flex Spending Accounts funds for medical and child care expenses. This can provide tax savings.

 

Stock Sales

 

Offset capital gains by selling underperforming stocks. Be mindful of wash sale rules when repurchasing similar stocks.

 

Retirement Planning

 

– IRAs: Contribute to your IRA before Tax Filing Day to get deductions for 2024 (up to $7,000 under 50 and $8,000 over 50). Consider donating your 2024 minimum distribution to a charity by December 31, 2024.

– Roth IRAs: Explore rollovers and “back door” contributions.

– 401(k) and Roth 401(k): Take advantage of employer matching contributions.

 

Retirement Distributions

 

For questions about retirement fund distributions or retirement planning, please seek personalized advice.

 

Notable Business Changes

 

– Business meals will remain at a 50% deduction in 2024 and 2025.

– 2024 business mileage reimbursements are 67 cents/mile, with 2025 rates to be announced soon.

– Bonus Depreciation: Reduced to 60% in 2024 and 40% in 2025.

 

That concludes our updates for the 2024 tax filing year. Feel free to contact me for answers to your tax questions at no additional cost.