Preparing for 2024 Tax Filing Season (2023 Tax Returns)

Dearest Clients,

Best wishes of health and prosperity for you and your family despite what is going on.

The 2024 tax filing season (2023 tax returns) is fast approaching. See below for some tips to help you before this year is over:

1.       Check your paycheck withholdings

The IRS encourages everyone to use the Withholding Calculator to perform a quick “paycheck checkup.” 

https://www.irs.gov/individuals/irs-withholding-calculator

2.       Get organized

Some ideas to make the next tax season easier:

o   Keep all your tax-related documents and receipts in one place so they are easy to pass on to your tax preparer during tax season. I provide my clients with complimentary plastic portfolio folders to keep all your tax documents in one place throughout the year.

o   Keep a tally of key tax-related expenses in spreadsheets: medical expenses, business expenses (and income), charity expenses, childcare expenses, etc. to print out for tax season and hand to your tax preparer. Contact me and I will email you complimentary spreadsheet examples for you to use.

Some preparers charge extra if they need to go through large amounts of receipts to total items for you. Maintaining running totals throughout the year helps ease the burden of finding the entire year’s numbers during tax season. Just keep the receipts for your records.

3.       Max out your retirement plan contributions

The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan increase to $22,500. The catch-up contribution limit for employees aged 50 and over who participate in these plans increases to $7,500.

The catch-up contribution limit for employees age 50 and over who participate in SIMPLE plans will increase to $3,500. The amount individuals can contribute to their SIMPLE retirement accounts will increase to $15,500.

The limit on annual contributions to an IRA will increase to $6,500 ($7,500 if you’re age 50 or older). For IRA contributions after 70 and a half, for 2020 and later, there is no age limit on making regular contributions to traditional or Roth IRAs.

4.       Take your Required Minimum Distributions (RMD’s)

You generally have to start taking withdrawals from your IRA, SEP IRA, SIMPLE IRA, or retirement plan account when you reach age 72 (73 if you reach age 72 after Dec. 31, 2022; 70 ½ if you reach 70 ½ before January 1, 2020). Roth IRAs do not require withdrawals until after the death of the owner.

5.       Bunch deductions

The 2023 standard deductions are: $13,850 if you are single or use married filing separate status; $27,700 if you are married and you and your spouse file a joint return; $20,800 if you are head of household.

Bunching is a method where you time expenses by pushing deductible expenses into one calendar year, like charitable contributions (including non-cash and charitable miles), prepaying January’s mortgage payment, paying for needed medical expenses within the year or paying for college tuition. Just keep the receipts for your records.

6.       Tax-loss harvesting

Taxpayers whose capital losses are more than their capital gains can deduct the difference as losses on their tax returns, up to $3,000 per year, or $1,500 if married and filing a separate return. When their total net capital loss is more than the limit they can deduct, taxpayers can carry the loss forward over to next year’s tax returns.

7.       Annual exclusion of gifts

In 2023, the annual exclusion is $17,000. This means you can give up to that amount to a family member without having to pay a gift tax.

Putting the $17,000 in a 529 plan can help keep 100 percent of the money. The extra benefit is when students use the funds for a school, it’s taken out tax-free.

8.       Update your beneficiary designations

If something should happen to you, it is wise to have your estate in order as best as you can. This will help with any taxes due to your loved ones upon your death. It also brings some peace of mind that your affairs are in order and your loved ones are taken care of.

I offer tax planning and personal budget counseling services to help you be prepared for the next tax season. Also, please see my r

ecent checklist on my website so you can prepare your tax documents early for next tax filing season.

Please note that your interests are my primary concern and it is a pleasure to serve you. I thank you for your continued support and I look forward to speaking with you or seeing you soon.

Very truly yours,

Thalia I. Treby, MS