Dear Clients,
As we approach the end of 2024 and the beginning of 2025, 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 the 2024 year-end tax planning and wish to do so, please call the office at 410-643-4477 and talk 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 2024 is $23,000, and if you are 50 and older, it is $30,500. The contribution limit will increase to $23,500 and $31,000, respectively, for 2025.
The SIMPLE IRA’s 2024 contribution limit is $16,000, and if you are 50 and older, it is $19,500. The contribution limit will increase to $17,600 and $21,450, respectively, for 2025.
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, 2024).
The 2024 Health Savings Account Annual Contribution Limit for high deductible health plans for individuals/families is $4,150/$8,300. If you are over 55, you can contribute an additional $1,000. If you are married, your spouse must contribute to a separate account. The contribution amounts for 2025 are $4,300/$8,550, respectively. If you are over 55, you can contribute an additional $1,000.
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. This can help plan for income-related monthly adjustments (IRMAA) on your Medicare Part B and D premiums.
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. Will you continue to have this income, 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 a foreign checking account, or hold stock outside the United States? If so, you must disclose those accounts 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 2024, the amount you may give to one person in one year without Gift Tax return filing requirements is $18,000. For the tax year 2025, this amount is $19,000.
Digital Assets
Digital Assets, also known as Cryptocurrency and virtual currency, have become 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, you must account for how the money was used. 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. We strongly suggest you contact us for a planning meeting for these items.
Maryland Family and Medical Leave Insurance (New in 2025)
Maryland is preparing to launch a new paid family and medical leave program! Starting July 1, 2026, workers will receive job protection and be able to take time away from work to care for themselves or a family member and still be paid up to $1,000 a week for up to 12 weeks. FAMLI is an insurance program. Employers and workers will make contributions to a fund administered by the State. Alternatively, an employer may apply to use a commercial or self-insured plan. When workers need to take leave, the State or the private plan will pay them a portion of their salary.
July 1, 2025: The contribution period for the State Plan begins.
This means payroll deductions will begin on July 1, 2025, and employers will remit the first payment to the State in October 2025.
July 1, 2026: Benefits for all workers begin.
The contributions employers remit to the State will create a trust fund. The fund will grow over time and be ready to pay out benefits to Maryland workers starting July 1, 2026.
Beneficial Ownership Information Reporting
Who Needs to Report?
The rules currently apply to domestic reporting companies (LLCs, corporations, etc., formed in the US) and foreign reporting companies (entities formed under foreign laws but doing business in the US). Certain entities, such as publicly traded companies and not-for-profit organizations, are exempt from reporting.
Who is Considered a Beneficial Owner?
Beneficial owners own at least 25% of the company's interests or significantly influence major financial and operational decisions. They typically include senior officers and key board members.
Required Information about Beneficial Owners
Required Information about Company Applicants
Required Information about the Reporting Company
How to Report
Reports can be electronically filed on the FinCEN website. This method allows easy updates and resubmissions with no initial submission fees if necessary.
Reporting Deadlines
Penalties for Non-Compliance
Failure to comply with these guidelines may result in fines and imprisonment. Civil and criminal penalties can accrue for continued non-compliance.
For more detailed information and to access the necessary forms, please visit the following links:
Most business owners should be able to complete the online filing with little to no assistance using this link. If you need help or wish someone else to prepare the form, Kram, McCarthy, Ayers & Frost, LLC has partnered with Strategic Tax Planning to assist our clients with their streamlined online application.
If you have read this far, thank you. Keeping up with ever-changing tax laws can be overwhelming. If you have any questions, please reach out.
Christopher Williams CPA/PFS, CFP®, MST, chrisw@kmaf.cpa
Gregory Litvinuck CPA, gregl@kmaf.cpa
Office 410-643-4477
