As we bid farewell to another eventful year, it’s time to put a bow on 2023 and look ahead to what’s to come in 2024. As we sit on the brink of 2024, it’s essential to get our tax affairs in order before looking too far ahead.
The end of the year is a critical period for tax planning, serving the dual purpose of closing off Calendar Year 2023 and gearing up for Calendar Year 2024. At our firm, we understand the importance of this transition and are here to remind you of key end-of-year tax tasks essential for both individuals and businesses. It’s crucial to ensure that certain tasks are completed before we step into the new year while also keeping an eye on what 2024 has in store.
End-of-Year Tax Prep
As we approach the end of the year, certain annual tax preparation tasks remain as important as they have each passing year. It’s time to organize and gather all the necessary documentation needed for filing your personal or business income taxes. This documentation covers a wide range, including all income sources, retirement account contributions, details of interest paid or accrued, comprehensive expense lists, gain/loss reports, precise withholding calculations, and more. These elements form the backbone of your tax filings, so meeting with a tax professional to go over your situation in preparation for filing is a key element of avoiding issues down the line.
Remember, the tax year doesn’t end until the stroke of midnight ushers in 2024. This leaves you with a valuable window to make strategic business purchases, sales, adjustments, and other financial moves that will impact your upcoming tax filing. For businesses, this is an opportune time to consider investments that can be depreciated in the same calendar year through Section 179 deductions, optimizing your tax position.
Preparing for the 2024 Tax Year
Looking ahead to 2024, the tax landscape doesn’t appear to be undergoing any significant changes as compared to recent years (likely due to further separation from the financial impacts of the pandemic). However, staying updated with the upcoming adjustments is still crucial. For example, the gifting limit is set to increase from $17,000 to $18,000. Changes like this are critical to keep up with so you don’t end up with surprises on your next tax filing. Consulting a tax professional is advisable to navigate them effectively.
A notable change in 2024 relates to 529 plans. Now, under specific conditions, excess funds in a 529 plan can be rolled over into a Roth IRA. This rollover is subject to several criteria: the 529 plan must have been active for at least 15 years; the rollover amount cannot exceed the sum of contributions and earnings from the past five years (there’s a $35,000-lifetime limit on such rollovers), they must adhere to annual Roth IRA contribution limits, and the Roth IRA owner must have earned income equal to or exceeding the rollover amount.
Talk to a Tax Professional for Peace of Mind
Tax seasons come and go with intricacies that demand careful attention and navigation. Ensuring that all your documentation is comprehensively reviewed by a tax professional is not just advisable, it’s essential for informed decision-making regarding your finances and tax filings. If you’re looking for thorough legal guidance, contact Robert V. Boeshaar, Attorney at Law. We’re here to help you understand your unique situation and uncover avenues to optimize your tax savings as we transition into 2024.
Robert V. Boeshaar Attorney at Law, LL.M.,PLLC
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