Dear Clients,

As we approach the end of 2023 and the beginning of 2024, now is the time for individuals, business owners, and family offices to review their current and future tax situations and identify opportunities for reducing, deferring, or accelerating their tax obligations.  With rising interest rates, inflation, and continuing market volatility, tax planning is as essential as ever for taxpayers looking to manage cash flow while paying the least taxes possible over time.  If you have not spoken to us about 2023 year-end tax planning and wish to do so, please call the office at 410-643-4477 and speak to Marie.

Retirement Savings

Beginning in September 2022, the new Maryland Saves Program (https://marylandsaves.com/) requires most businesses to offer a retirement plan.  This program is a low-cost, simple solution for retirement plan savings with no employer fees or requirements.  Ask about the Maryland Saves Program if your employer does not offer a retirement savings plan.

If your employer offers a 401K plan, this continues to be a great way to defer the maximum amount the IRS allows yearly.  The maximum employee contribution in 2023 is $22,500 and $30,000 if you are 50 and older.  The limit will increase to $23,000 and $30,500, respectively, in 2024.

Individuals can now contribute to their Traditional IRAs after they turn 70 ½.  You generally must start taking out required minimum distributions from your traditional IRA, SEP IRA, SIMPLE IRA, and retirement plan accounts when you reach age 72 (73 if you reach 72 after Dec. 31, 2022).

The 2023 Health Savings Account Annual Contribution Limit for high deductible health plans for individuals/families is $3,850/$7,750.  If you are over 50, you can contribute an additional $1,000.  If you are married, your spouse must contribute to a separate account.  The contribution amounts for 2024 are $4,150/$8,300, respectively.

Did you know that Individuals aged 70 ½ or older can donate up to $100,000 to a qualified charity directly from a traditional IRA?  These donations can count towards your required minimum distributions for a given year and would not be included in taxable income.

Income

If you receive a 1099-K this year, please provide it to us.  We will also need to know what triggered this statement/income.  Is this income you will continue to have, or was this a one-time event?  We may have additional questions for you so we can report the income correctly.

Do you have foreign investments, control over a foreign checking account, or hold stock outside the United States?  Those accounts must be disclosed to the IRS or face 50% yearly penalties.

Very few Americans need to worry about Federal estate taxes because of changes in the estate tax limit at the Federal level.  For the tax year 2023, the amount you may give to one person in one year without  Gift Tax return filing requirements was $17,000.  For the tax year 2024, this amount is $18,000.

Digital Assets

Digital Assets, also known as Cryptocurrency and virtual currency, have been increasingly popular.  If you have any digital assets, we must discuss the reporting and tax implications with you.

Deductions

Fewer Americans can itemize deductions because of the increased standard deduction.  One simple tool to get the best “bang for your buck” would be to practice the “bunching of charitable contributions.”  You can make charitable contributions every other year to double up and increase your itemized deductions.  All deductions of any amount must have a receipt.  Any individual contribution over $250 must also have an acknowledgment letter from the charity.

Property

According to the IRS, if you drew money out on a home mortgage, home equity, or refinance, we must have an accounting of that money.  We need your 1098 mortgage statement to show interest and property taxes paid if you own a home.  Additionally, we must obtain refinancing closing statements.

Suppose you are considering retirement, starting a small business, selling an investment or business, or a college savings program.  In that case, we strongly suggest you contact us for a planning meeting for these items.

If you have read this far, thank you.  Keeping up with ever-changing tax laws can be overwhelming.  If you have any questions regarding anything, please reach out.

Christopher Williams CPA/PFS, CFP®, MST, chrisw@kmaf.cpa

Gregory Litvinuck CPA,  gregl@kmaf.cpa

Office 410-643-4477