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8 Smart Year-End Tax Planning Tips

Year-end is just around the corner, but you still have time to make some smart tax-saving moves before the clock runs out. These Power 8 strategies can help you lock in savings and set yourself up for a successful tax season.

1️⃣ Check Your Paycheck Withholding

Hey, check your paycheck withholding. Too much? Hello, refund! Too little? Hello, surprise bill from Uncle Sam! Aim for a break-even to make your money work harder, not the government.

2️⃣ Defer Your Income

Got a bonus coming? See if you can push it to next year and lower your tax bill. Self-employed and filing accrual basis? Consider delaying those invoices to your customers.

3️⃣ Adjust Retirement Account Contributions

Boost those pre-tax retirement contributions and save on taxes. Or look at maxing out your ROTH contributions by year-end. But remember, this money is for your golden years, so only boost if you have extra cash lying around.

4️⃣ RMDs for the 73+ Club

If you’re 73 or older, don’t forget to make your RMD withdraw from your retirement accounts by Dec 31st! Miss it, and Uncle Sam hits you with a hefty penalty. No one wants that.

5️⃣ Use Your Gift Tax Exclusion

Feeling generous? Use your $17,000 exclusion to give money to each person without Uncle Sam dipping into it. Stay under the radar of the IRS’s gift grab.

6️⃣ Maximize Tax Deductions and Credits

Pay property taxes and January’s mortgage early for deductions. Donating big? Itemize for tax breaks. Going electric? Enjoy those EV credits. And finish those eco-friendly home upgrades!

7️⃣ Consider a Roth Conversion

Switch to a Roth for tax-free growth and withdrawals. It’s a savvy move but chat with a pro first. Keep those dollars away from the taxman!

8️⃣ Consult a Tax Professional

End-of-year tax planning? Get a tax pro on your side, like us! Make smart moves, cut your tax bill, and stride into tax season like a boss.

Let’s turn these tax tips into real savings!

Call us today, and together, we’ll craft a personalized tax plan that ensures your 2024 year-end tax strategy is rock solid. Finish the year strong and stride into tax season with confidence!

6 Year-End Tax Planning Strategies to Consider Now

Have you kicked off your year-end tax planning yet?

As we are approaching the final quarter, it’s the perfect time for strategic tax planning to reduce your tax bill. If you’re a business owner, tax planning isn’t a one-and-done deal—it’s an ongoing process.

Tax Planning Tips

Here are six essential year-end tax planning strategies for 2024 that you should consider:

1️⃣ Review Your Business Structure
(see What’s the best business formation setup in this booklet). As your business grows, your structure (entity) may change.
2️⃣ Maximize Your Retirement Plan: Save on taxes by contributing to a retirement plan. Whether it’s a SERP IRA, Solo 401(k), or a combo of a 401(k) with a defined-benefit pension plan, these are effective tools for slashing your tax bill.
3️⃣ Utilize the Home Office Deduction: This valuable tax break can save hundreds, or even thousands, of dollars in taxes each year.
4️⃣ Ditch the Shoebox Accounting: Track income and expenses throughout the year using a cloud-based tool your accountant can access.
5️⃣ Consider First-Year Bonus Depreciation
80% bonus depreciationon new property acquired and placed in service during 2021. If you’re having a big income year, consider moving up big purchases before year-end (see Should I buy equipment for year-end in this booklet).
6️⃣ Be Proactive with Income and Deductions: If you expect to be in the same or lower tax bracket next year, deferring some income to 2025 could be beneficial. Conversely, if you expect a higher tax bracket, accelerating income into 2024 or delaying deductions until 2025 might make sense.

💡 More Tips

Don’t miss out on additional year-end tax planning strategies. Download our comprehensive 2024 Year-End Tax Planning Guide for business owners and ensure you’re making the most of every opportunity to reduce your tax liability.

Ready to put these strategies into action?

Schedule a consultation with us today, and let’s tailor a tax planning strategy that works for your unique business needs—because smart planning now means fewer headaches later.

Offer in Compromise FAQs

If you’re staring down a tax debt you can’t possibly pay, it’s time to consider an IRS Offer in Compromise (OIC). This option lets qualified individuals settle their tax debt for less than the full amount owed, offering a financial lifeline when times are tough.

Contrary to popular belief, Offers in Compromise aren’t a pipe dream. The IRS approves over 40% of these applications, with the average settlement exceeding $10,000. Not too shabby, right?

❓ How to Know if You Qualify

Generally, there are three factors that are considered by the IRS when somebody applies for an Offer in Compromise. Most commonly, the IRS must have a belief that you will not be able to pay your tax debt off at any point in the near future. This means that your financial situation is probably not going to improve anytime soon and that the IRS would not likely be successful in forcing collections on you.

At the end of the day, the IRS needs to believe they are getting a fair deal – so if you have any potential to pay your debt at any point in the near future, you may not qualify.

You might also qualify for an Offer in Compromise if there is doubt as to your actual tax liability; if you have documentation proving that you owe less in taxes than the IRS believes to be true, or if an assessor has made a mistake on your reporting, you may be more likely to have an Offer in Compromise accepted by the IRS.

Finally, if paying your tax bill would create a significant financial hardship, you may also qualify for an Offer in Compromise. Of course, proving financial hardship can sometimes be a challenge.

In addition to all of these considerations, there are several other eligibility requirements that you must meet in order to qualify for an Offer in Compromise:

✅ You must pay the application fee
✅ You must have filed all of your required tax returns
✅ You cannot be going through a bankruptcy at the time of filing
✅ You must submit all required documentation

❓ What to Expect from the Process

One of the most complicated aspects of going through the application process for an IRS Offer in Compromise is filling out and submitting all the required paperwork. There are several documents you may need to complete to even be considered for an Offer in Compromise, including:

💡 IRS Form 433-A – this form requires information on your assets, liabilities, expenses, and income to determine your Reasonable Collection Potential.
💡 IRS Form 433-B – this form needs to be filled out for businesses applying for an Offer in Compromise.
💡 IRS Form 656 – use this form to apply for an Offer in Compromise so long as there are no doubts as to your tax liability.
💡 IRS Form 656-L – use this form to apply if you are disputing your tax liability to the IRS.

In addition to completing these official forms as part of the application process, you will also need to provide some documentation, such as:

📌 health care statements
📌 bank and credit card statements
📌 investment information
📌 proof of living expenses
📌 car loan, mortgage, and similar loan statements
📌 copies of related tax returns
📌 Working With a Tax Professional Can Help

As you can probably see, the process of determining your eligibility and applying for an Offer in Compromise with the IRS can be quite time consuming and complex. This is where it can be helpful to consult with a tax professional for assistance. A qualified and experienced tax professional will be able to assess your current tax situation and give you a better idea as to whether or not going through the Offer in Compromise application process is worth your time and efforts.

If so, he or she will also be able to assist you with the application process, ensuring that you’re filling out the correct forms and that you submit all required documentation as well. This can increase your chances of reaching a successful offer with the IRS and take a lot of the stress and burden off your chest.

Even if you don’t qualify for an Offer in Compromise, your tax professional may be able to assist you in figuring out other alternatives for making your tax payment more financially manageable for you. This might include options to work out a payment/installment program with the IRS, among other options.

💡 The Bottom Line

Getting an IRS Offer in Compromise accepted is almost a coin flip, but if you meet the qualifications and submit everything correctly, your chances are solid. To boost your odds and lighten your load, team up with a seasoned tax professional. Don’t have one? Now’s the time to find one who can help you navigate the 2024 tax landscape and get the relief you need.

Ready to explore your options?

Reach out to us today to schedule a consultation and take the first step toward a fresh financial start. Whether it’s an Offer in Compromise or another solution, we’re here to guide you every step of the way.

How Inflation Can Impact Your Taxes in 2024

Guess what? Inflation isn’t just about rising prices—it’s also giving your federal tax breaks a bit of a boost. In fact, for the 2023 tax year, we’re looking at a solid 7% increase in many federal tax adjustments compared to 2022. And hold onto your hats, because we’re diving into what this means for your wallet, including some early estimates for 2024. By the end of this, you’ll be walking around like a tax-saving pro, ready to take on the year until the official numbers drop in October.

📌 Annual Federal Gift Tax Exclusion

The 2024 tax year is bringing some gift-giving goodness your way. Brace yourselves for a significant increase in the annual federal gift tax exclusion, soaring to a dazzling $17,000 per lucky taxpayer. That’s right, we’re talking about a large $1,000 hike from last year’s limit of $16,000. And here’s the best part: annual gifting up to this exclusion amount won’t work its way into your lifetime federal gift and estate tax exemption. The exclusion amount only goes up in $1,000 increments, so if the inflation factor stays put at 4% for 2024, get ready to see the same $17,000 exclusion next year. Excited about gift-giving yet?

📌 Unified Federal Gift and Estate Tax Exemption

In life, there are death and taxes. Fortunately, if you are the beneficiary of an estate, the 2023 tax year is delivering some serious tax benefits. The federal gift and estate tax exemption has skyrocketed to $12.92 million. That’s an eye-popping increase of $860,000 from last year’s $12.06 million. But wait, there’s more! If you filed your taxes as married, you get the privilege of doubling your exemption to a staggering $25.84 million in 2023. That’s a mind-blowing $1.72 million jump from 2022!

Now, let’s talk about the good news for all the high-net-worth individuals out there. These adjustments mean it’s time to break out the confetti because you can now make some seriously substantial gifts or leave behind some downright impressive estates, all without worrying about those pesky federal gift or estate taxes.

Did you know? The federal gift and estate tax exemption now goes up in flat increments of \$10,000. If inflation keeps steady at 4% for 2024, get ready to witness the exemption soaring to a potential $13.44 million in 2024 (or up to $26.88 million for all the lucky married couples out there).

📌Generation-Skipping Transfer Tax

The federal generation-skipping transfer tax (GSTT) also applies to wealth transfers targeting individuals more than one generation below the donor. Here’s the kicker: the exclusion for those generation-skipping gifts has soared to $17,000 for 2023. That’s a thrilling $1,000 increase from 2022. But wait, there’s more! The GSTT exemption for lifetime gifts and bequests aligns with the unified exemption, reaching an impressive $12.92 million ($25.84 million for all those lucky married couples) in 2023. Now, that’s what I call leveling up!

📌Noncitizen Spouses

Hey there, international lovebirds! Noncitizen spouses may miss out on the unlimited marital deduction privilege, but hold onto their passports because in 2023, the annual federal gift tax exclusion for noncitizen spouses skyrockets to a whopping $175,000. That’s a nice bump from last year’s $164,000. And it gets better: U.S. citizens can shower their noncitizen spouse with gifts up to $175,000 without touching a single penny of their own $12.92 million unified federal gift and estate tax exemption. Talk about international gift-giving bliss!

And with the inflation factor staying at 4% for 2024, the gift tax exclusion for noncitizen spouses could reach an estimated \$182,000. So, get ready to spread the love and share those tax advantages with your global sweetheart. It’s time to celebrate the power of love and a little thing

💡Lessons Learned

The significant inflation adjustments to federal gift and estate tax parameters are like golden opportunities knocking at your door. But hey, don’t go it alone on this tax adventure. To truly unleash the full potential of these favorable tax rules, I’ve got two words for you: consult and conquer!

Whether it’s your estate planning team or our tax experts, seek the guidance of the pros who know the tax game inside out. Trust me, you don’t want to miss out on maximizing your wealth transfer opportunities in this exciting tax landscape. So, stay informed, take proactive measures, and let’s show those taxes who’s boss! Together, we’ll conquer the world of tax breaks, one dollar at a time.

Ready to make the most of these federal tax changes in 2024?

Reach out to our expert team today. Let’s tailor a plan that fits your financial goals—because when it comes to taxes, every dollar counts. Let’s keep more of your hard-earned wealth where it belongs: with you.

Read This before Tossing Old Tax Records!

If you’re the tidy type and have just filed your tax return for this year, 2024, you might be eyeing that stack of old tax records and wondering if it’s time to declutter. On the flip side, if tossing documents makes you nervous, you’re probably searching for another box to stash them in. So, what’s the right move? You do need to keep them for a certain retention period, but not forever.

Retaining Tax Records

Generally, tax records are retained for two reasons:

1️⃣ In case the IRS or a state agency decides to question the information on your tax returns.
2️⃣ To keep track of the tax basis of your capital assets so that you can minimize your tax liability when you dispose of those assets.

With certain exceptions, the statute of limitations for assessing additional taxes is three years from the return’s due date or its filing date, whichever is later. However, keep in mind that many states have a retention period that’s one year longer than federal law.

Additionally, the federal assessment period extends to six years if more than 25% of a taxpayer’s gross income is omitted from a tax return.

Remember, the three-year clock doesn’t start until a return has been filed. There’s no statute of limitations for false or fraudulent returns meant to evade tax payments.

If none of these exceptions apply to you, then for federal purposes, you can probably discard most of your tax records that are more than three years old. Just be sure to add an extra year if your state has a longer statute.

💡 Examples of Retaining Tax Records

Let’s look at some examples:

Sue filed her 2020 tax return before the due date of April 15, 2021. She can safely dispose of most of her 2020 records after April 15, 2024. Meanwhile, Don filed his 2020 return on June 1, 2021. He should keep his records until at least June 1, 2024. In both cases, if their states have longer retention periods, they should hold onto their records a bit longer. And don’t forget, if a due date falls on a weekend or holiday, the actual due date is the next business day.

The challenge with discarding all records for a particular year once the statute of limitations has expired is that some documents relate to the basis of your capital assets. These basis records should be kept until after the statute has expired for the year in which the asset was sold. To simplify things, consider keeping separate files for each asset.

Examples of Basis Records:

📌 Stock Acquisition Data Tax Records
- If you own stock in a corporation, keep the purchase records until at least four years after the year you sell the stock. This ensures you have the necessary information to accurately report profit or loss on your tax return. If you have a capital loss carryover, hold onto these records until the statute of limitations has passed for the last year you claimed that loss.
📌 Stock and Mutual Fund Statements (if you reinvest dividends)
- Many taxpayers use the dividends that they receive from stocks or mutual funds to buy more shares of the same stock or fund. These reinvested amounts add to the basis of the property and reduce the gain when They are eventually sold. Keep all such dividend statements for at least four years after the final sale.

📌 Tangible Property Purchase and Improvement Tax Records

- Keep records of home, investment, rental-property, or business-property acquisitions; the related capital improvements; and the final settlement statements from the sale for at least four years after the underlying property is sold.

Not sure which tax records to keep or toss in 2024?

We’re here to help you navigate the maze of tax return documents and retention periods. Contact us today, and let’s make sure your financial records are in perfect order!

Tax Tips for Procrastinators in Tax Filing

Consider the Consequences of Late Filing Your Tax Return
If you’ve been procrastinating on tax filing or have skipped past years, it’s time to think about the consequences. From penalties and interest to potential IRS enforcement actions, the costs of delaying can add up. And if you’re due a refund for a prior year, you might risk losing it entirely.

📌 Penalties

If you haven’t filed your return and you owe taxes, stop procrastinating because you could face both a late payment and a late filing penalty. File your return as soon as possible and pay as much as you can to minimize penalties and interest.

📌 Failure-to-Pay

The failure-to-pay penalty is 0.5% of your unpaid taxes for each month (or part of a month) that your payment is late, up to a maximum of 25%. If you delay too long and the IRS issues a levy notice, and you don’t pay within 10 days, the penalty increases to a full 1% per month. It’s a steep price to pay for putting off your tax filing.

⌛Not Filing on Time

There is also a penalty for not filing on time. The failure-to-file penalty is 5% of the tax owed for each month or part of a month that your return is late, up to a maximum of 25%. If your return is over 60 days late, the penalty is $435 (for tax returns required to be filed in 2020, 2021, and 2022) or 100% of the tax required to be shown on the return, whichever is less.

💡 Don't Wait... Even if a Refund is Due

No penalty exists for filing late if you’re due a refund. However, waiting too long can cost you your refund and any tax credits you qualify for. To receive a refund, you must file within three years of the original due date.

✅ Enforcement by the IRS

Taxpayers who continue to not file a required return and fail to respond to IRS requests to do so may be subject to a variety of enforcement actions, all of which can be unpleasant.

Need Help with Compliance?

It’s never too late to get back on track. Let us help you navigate the complexities of late tax filing and bring your federal—and state, if applicable—income tax returns into compliance.

Don’t let procrastination turn into a costly mistake. Reach out to us now, and let’s get your tax filings back on track before those penalties add up. Your peace of mind is just a phone call away.