Taxes for 2023 and 2024

You may not think the upcoming changes for 2024 are important right now since you will be filing for 2023. However, those changes may affect your long-term tax plans, whether for your estate or your business. France Law Firm has an estate planning attorney who is also a business tax attorney who can help ensure your estate plan, business plan, and tax plan all work together to benefit you now.

Taxes for 2024 apply to the tax returns you file in 2025, while taxes for 2023 apply to the tax returns you file in 2024 (current year).

Per-Barrel Oil Tax

The Inflation Reduction Act reinstated the Hazardous Substance Superfund, which adds yet another tax to each barrel of oil. This tax affects anyone who itemizes and claims fuel for their businesses, as the oil companies are going to pass that tax onto businesses and individuals. While the tax is new in 2023, it is retroactive to Dec. 31, 2016.

Standard Deduction

The standard deduction is changing for 2024. In 2023, it is $27,700 for a couple married filing jointly. For 2024 (taxes filed in 2025), you will have an increase of $1,500 for a standard deduction of $29,200. Rates for other filing statuses are:

• Single People and Those Married Filing Separately: $13,850 for 2023 and $14,600 for 2024
• Heads of Households: $20,800 for 2023 and $21,900 for 2024

Marginal Rates

The tax brackets are remaining the same as the 2023 tax brackets. For 2023 and 2024, the top rate is 37 percent for individuals making over $609,350 and for married couples filing jointly making over $731,200. The additional brackets are as follows:

• 35 percent for individuals making over $243,725 and married couples filing jointly making $487,450
• 32 percent for individuals making over $191,950 and married couples filing jointly making over 383,900
• 24 percent for individuals making over $100,525 and married couples filing jointly making over $201,050
• 22 percent for individuals making over $47,150 and married couples filing jointly making over 94,300
• 12 percent for individuals making over $11,600 and married couples filing joint making over $23,200
• 10 percent for individuals making $11,600 or less or married couples filing jointly making $23,200 or less

Alternative Minimum Tax

The Alternative Minimum Tax (AMT) limits deductions. If an individual or married couple itemizing has too many deductions, the AMT kicks in, so you can’t lower your tax responsibility too much. In 2023, the AMT exemption is $81,300 and starts to phase out at $578,150 for individuals and 126,500, phasing out at $1,156,300 for couples filing jointly.

For 2024, the AMT kicks in at $85,700 for individuals and starts to phase out at $1,156,300.

Earned Income Tax Credit

Qualifying taxpayers who have at least three qualifying children can receive an Earned Income Tax Credit (EITC) of $7,830 in 2024 and $7,430 in 2023.

Estate and Gift Taxes

The basic exclusion for estate taxes (commonly known as the Federal Death Tax) for those who died in 2023 is $12,920,00, and in 2024, $13,610,000.

The annual gift tax exclusion is $17,000 for 2023 and $18,000 for 2024.

Contact France Law Firm

These are just a few of the taxes that will affect the average person or couple filing jointly. Several other changes include the limitation for the qualified transportation fringe benefit, employee salary deductions for contributions to health flexible spending accounts, self-only coverage in Medicare Savings Accounts, foreign earned income, and the maximum credit allowed for adoptions.

When it’s time to start your taxes for 2023 and if you need to make changes to your estate plan based on tax changes for this year and next year, contact a tax attorney and estate planning attorney at France Law Firm for a consultation.

The post Understanding the New Tax Laws: What You Need to Know for the Upcoming Year appeared first on France Law Firm.

Organize, Organize, Organize

If you spent hour after frustrating hour this year trying to pull together the records for income and deductions, you may have found yourself thinking, “There has to be a better way.” Fortunately, there is. It will take some initial work to get yourself organized, but once you have a system in place, you’ll thank yourself come tax season next year.

If you’re self-employed, it’s critical to have a record-keeping system to organize your business income and expenses. Keeping receipts and invoices, and organizing them according to type (i.e. office supplies, insurance, postage, marketing, auto expenses, etc.)

Even if you’re not a business owner, you can benefit from a similar system. Create a folder where you can record/store documentation of all of your charitable gifting, including donations to second-hand charitable organizations, churches, charitable fundraisers, etc.

If you incur medical expenses that you think you may be able to deduct, keeping accurate, complete records throughout the year can save you a significant amount of time next year too. Document all of your out-of-pocket expenses including prescription and over-the-counter medications, co-pays and deductibles and any other payments made for health care this year. If you travel for medical appointments, you should also keep a record of the dates and miles driven, as well as travel expenses for such trips that may be deductible.

Don’t let this suggestion overwhelm you; if separating your expenses by type (charitable, medical) seems too onerous, at least start keeping all of your 2017 information in one file folder or large envelope. Then, next year, you’ll need to sort through those records, but won’t need to spend time trying to pull it all together. You’re less likely to miss deductible expenses when you keep accurate, complete records throughout the year too.

Planning is Power

If you’re not happy with the result of your 2016 tax filings, now is the time to take action. Use the information from your tax return, and talk to your tax and financial professionals to get ideas for lowering your tax obligation in 2017.

For some people, contributing more to tax-deferred retirement vehicles may be beneficial. For others, planning charitable gifts for the remainder of the year can help lower taxable income while having a meaningful impact on their community.

Business owners might realize tax benefits by establishing an employer-sponsored retirement plan, or by making an investment in a new building, new equipment or vehicles.

Because everyone’s tax situation is a little bit different, there aren’t any one-size-fits-all solutions. However, odds are good that a little planning now will lower your tax bill next year.

Look at Tax Withholding

Nobody likes learning they need to write a big check to the IRS to cover their taxes. If you found yourself in that situation this year, take a moment to adjust your tax withholding on your income. If you’re working for an employer who handles withholding for you, changing the number of exemptions will mean your paychecks will be a little bit smaller, but it can help avoid the pain of having to pay the IRS next April. If you take regular or periodic distributions from retirement accounts or annuities, you can change the tax withholding amounts on those distributions to even things out too.

If you find yourself instead in a position where you’re getting a sizable refund from the IRS, that may mean that you are actually having too much income tax withheld throughout the year. Adjusting your exemptions or withholding percentage can help adjust your income throughout the year so you’re not loaning money to the U.S. government over the course of the year.

France Law Firm can Help

Taxes can be a headache, but taking little steps now can make the process much less stressful next year. France Law Firm can help. For more tips and suggestions to help make tax season easier next year, contact France Law Firm in Tallahassee today.

The post How To Make Next Year’s Taxes Easier appeared first on France Law Firm.

Taxable Income Reductions

Financial advisors and tax attorneys almost always push clients to create and contribute to retirement funds. That’s because this can be one of the gems to reducing your taxable income. IRA payments are considered a “pre-tax” contribution. That means that for every dollar you put into these retirement accounts, that’s a dollar you are not required to pay taxes on this year. Keep in mind, IRAs are really a tax-deferment plan and the government will be looking for that money in your twilight years. Like Ben Franklin said, taxes are certain. At least you’re softening the blow now and building financial security for the future.

The Sustainability of Spending Money

The green energy movement has opened up numerous doors for people to save money on taxes. Replacing antiquated heating systems, drafty windows and installing solar energy panels leads to significant tax rebates. These upgrades also improve your quality of life and increase property values. Taking these positive steps also gives you a wonderful feeling about doing your part for the environment. By spending money on energy efficiency, you’ll enjoy a better tax situation.

Plan Ahead

The thought of making charitable donations often hits you right in the middle of the gift-giving holidays. In many cases, that means having to stretch budgets and resources to effectively do both. After the season passes, many people look back wishing they could have given more. By practicing monthly or quarterly financial planning, you can allot resources in advance and feel good about the happiness spread through gifts and donations. Many of those charitable contributions are also excellent tax deductions. They’re the gift that keeps on giving.

It’s important to treat your personal finances like a business. And like any company, there are strategic investments to consider. You can diversify your portfolio by putting money into things like municipal bonds that are issued to fund projects such as airports and schools. These investments are considered tax exempt from federal and, usually, state taxes. Tax planning means making key decisions about your financial health in a timely fashion, not after the fact.

Brush up on previous years’ tax filings and use those records as an indicator for future decisions. Don’t hesitate to meet with your financial advisor or tax attorney. Get a clear understanding of the deductions you are taking full advantage of and those that could see improvement. Discuss potential tax credits and changes to the tax code. Long-term planning will undoubtedly make the process much easier from year to year.

Check the Box for Stress Deductions

One of the worst and most common things people do in terms of tax preparation is procrastinate. That personal policy actually doubles your stress. Not dealing with tax information leaves that little voice in the back of your mind that something remains unfinished. When crunch time arrives, you’re faced with a Herculean organizational task. Investing small amounts of time year-round will make things run much more smoothly and quiet that inner voice.

• Have A System: Create a system that works for you and streamline it from year to year. After all, taxes are forever. This doesn’t mean using and old shoe box full of crumpled receipts. There are plenty of inexpensive tax software products on the market. Even an Excel spreadsheet can provide basic expense tracking. Being organized is half the battle.
• Keep Receipts: You won’t save any extra money by having all of your receipts. On the other hand, if you get randomly audited, the IRS may reject certain expenditures and deductions without them. The IRS could also start a costly tax audit as well. A notebook and glue stick are sufficient to keep proof of payments organized. Many small business owners glue them to a page and make an entry about what that money went toward. In the event of a computer crash, this gives you a hard copy backup.

Benjamin Franklin and Founding Fathers fought the American Revolution to ensure fair and equitable taxation. You are assured a voice in how the government taxes your income and assets. Utilizing good organizational practices and financial planning can make your ledger sheet a little more equitable and easier to manage.

It’s important to work with an experienced attorney on tax-related matters. At the France Law Firm, we are here to help.

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