Ready to Tackle Your 2024 Taxes and Plan for 2025? Here’s How to Get Ahead
As the year winds down, the calendar serves as a reminder: it’s time to get serious about taxes. Sure, it’s not the most exciting part of ringing in the new year, but with a little preparation, you can set yourself up for financial success—not just for this tax season, but for years to come. Let’s dive into what you can do now to close out 2024 smoothly and prepare for a stress-free 2025.
Reflecting on 2024: Closing Out the Year Right
The end of the year always feels like a whirlwind. Between holidays, work deadlines, and family gatherings, it’s easy to put off tax prep. But trust me, a little effort now will save you big headaches come filing season.
Start by gathering all your records. Did you receive W-2s from employers or 1099s from freelance gigs or investment accounts? Don’t forget about those less obvious sources, like gig work (hello, Form 1099-K) or even cryptocurrency transactions. And if you had Marketplace health insurance, grab that Form 1095-A to reconcile your Premium Tax Credit.
Speaking of reconciliation, this is the perfect time to review your financial year. Did you maximize contributions to your retirement accounts? If not, there’s still time! Adding to an IRA or 401(k) by year-end not only strengthens your future but also reduces taxable income. And don’t overlook the charitable donations you made this year—those can add up.
Here’s another pro tip: take a closer look at your investments. If you have underperforming assets, selling them now could help you offset capital gains. It’s called tax-loss harvesting, and it’s a savvy move for those with a diverse portfolio.
Finally, double-check your banking information. If you’ve switched accounts or closed one recently, update your direct deposit details with the IRS. A delay in your refund because of outdated info is no way to start the new year.
What’s Changing for 2024 Filings?
Every tax year brings its own updates, and 2024 is no exception. If you’re contributing to retirement accounts, the limits have increased: IRAs now allow up to $7,000 ($8,000 if you’re 50 or older), and 401(k)s max out at $23,000, with catch-up contributions for those 50+ raising the total to $30,500.
Gift-givers, take note: the annual gift tax exclusion has climbed to $18,000. Whether you’re helping a loved one buy a car or funding their education, this higher threshold could mean significant savings.
And for those considering an electric vehicle, the Clean Vehicle Credit remains a strong incentive, with up to $7,500 available for qualifying purchases. Just be sure your income falls within the limits: $300,000 for married couples filing jointly, $225,000 for heads of household, and $150,000 for single filers.
Perhaps the most intriguing updates are the new exceptions to early withdrawal penalties from retirement accounts. If you’ve faced unexpected challenges, such as being a victim of domestic abuse or dealing with a federally declared disaster, you may qualify for penalty-free withdrawals under expanded rules from the SECURE 2.0 Act.
Looking Ahead to 2025: Why Preparation Matters
Tax planning isn’t just about surviving this season; it’s about thriving in the next. As we turn the page to 2025, now is the time to put systems in place that will make your financial life easier.
Start by revisiting your withholding. Did you owe taxes or get a big refund this year? Both scenarios suggest your W-4 needs adjusting. Fine-tuning your withholdings now could mean keeping more of your paycheck in 2025 or avoiding a surprise bill next April.
Next, think about recordkeeping. Tracking expenses like mileage, business meals, and charitable contributions throughout the year is a game-changer. Consider apps or spreadsheets to make it a habit—you’ll thank yourself when it’s time to file.
And don’t forget about major life changes. Whether you’re planning a big move, expecting a new addition to the family, or thinking about retirement, these events can have significant tax implications. Planning ahead with a professional can save you money and stress.
One more thing: automation is your friend. If you have recurring contributions to a 401(k) or IRA, make sure they’re optimized to hit those 2025 limits. Set it and forget it, and watch your savings grow.
Why Start Now?
It’s easy to procrastinate, but the sooner you get started, the more opportunities you have to save—and the fewer surprises you’ll face. At ABCRON Enterprises LLC, I specialize in helping clients close out their tax year with confidence and plan proactively for the future. A reasonably priced consultation session could be the best investment you make for your business and personal finances. You’ll be glad you did.
So why wait? Let’s tackle your taxes together and make 2025 your most financially savvy year yet. Reach out today to book your consultation and start the new year with confidence!
GET READY FOR 2023 TAX SEASON!
With every new year, we think about changes in our lives financially, physically, and spiritually. Then, you realized it is tax time again!
Planning for your taxes can help you file a complete, accurate tax return and avoid processing delays of your tax refunds. Here are some reminders for the upcoming tax filing season:
Gather and organize your tax records to include:
W2's from employers
Form 1099 from banks, brokerage account unemployment compensation, dividends, distributions from pensions, annuity, or retirement plan
Form 1099-K, 1099misc, other income from gig economy
records of virtual currency
1099-INT for interest received
Form 1095-A, Health Insurance Marketplace Statement, to reconcile advance Premium Tax Credits for Marketplace coverage.
Taxpayers can set up an Online Account in order to have access to:
View key data from your most recent tax return and access additional records and transcripts,
View details of your payment plan if you have one,
View 5 years of payment history and any pending or scheduled payments,
Make tax payments,
Tax notices
Life Changes
Did you get married or divorced?
Addition to your family (though birth or adoption)
Did you change jobs or have a second job? Consider adjusting your withholding if you owed taxes or received a large refund when you filed.
Did you purchase or sell your home?
Death of a spouse or dependent
Direct deposit information
Please let us know if your banking information has changed.
2024 Tax Law Changes
The contribution limit for employees who participate in 401(k), 403(b), and most 457 plans, as well as the federal government's Thrift Savings Plan is increased to $23,000, up from $22,500.
The limit on annual contributions to an IRA increased to $7,000, up from $6,500. The IRA catch‑up contribution limit for individuals aged 50 and over remains $1,000 for 2024.
The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), and most 457 plans, as well as the federal government's Thrift Savings Plan remains $7,500 for 2024. Therefore, participants in the above plans who are 50 and older can contribute up to $30,500, starting in 2024. The catch-up contribution limit for employees 50 and over who participate in SIMPLE plans remains $3,500 for 2024.
Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or the taxpayer's spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor the spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.) Here are the phase‑out ranges for 2024:
For single taxpayers covered by a workplace retirement plan, the phase-out range is increased to between $77,000 and $87,000.
For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is increased to between $123,000 and $143,000.
If you are not covered by a workplace retirement plan and are married to someone who is covered, the phase-out range is increased to between $230,000 and $240,000.
For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.
The income phase-out range for taxpayers making contributions to a Roth IRA is increased to between $146,000 and $161,000 for singles and heads of household. For married couples filing jointly, the income phase-out range is increased to between $230,000 and $240,000, up from between $218,000. The phase-out range for a married individual filing a separate return who makes contributions to a ROTH is the same as the traditional IRA above.
Taking distributions from your retirement plan or IRA before age 59 ½
Withdrawals or distribution from your retirement accounts are normally subject to ordinary income tax, and if taken prior to reaching age 59 ½ may be subject to an additional 10% tax unless you meet one of the exceptions below. New exceptions were added by the SECURE Act and SECURE 2.0 Act.
Exceptions to the 10% additional tax
Birth or adoption-you can distribute up to $5,000 per child for qualified birth or adoption expenses.
Corrective distributions (and associated earnings) of excess contributions.
Death- after death of the participant/IRA owner
Disability-total and permanent disability of the participant/IRA owner
Disaster recovery distribution up to $22,000 to individuals who sustain an economic loss by reason of a federally declared disaster where they live.
Domestic abuse victim distribution-to a victim of domestic abuse by a spouse or domestic partner, up to the lesser of $10,000 or 50% of account of account (distribution made after 12/31/2023)
Education- qualified higher education expenses only IRA, SEP, SIMPLE IRA and SARSEP
Emergency personal expense- one distribution per calendar year for personal or family emergency expenses, up to the lesser of $1,000 or vested account balance over $1,000 (made after 12/31/23)
Homebuyers-qualified first-time homebuyers, up to $10,000 from an IRA, SEP, SIMPLE IRA and SARSEP
Levy-because of an IRS Levy of the plan
Medical amount of unreimbursed medical expenses (>7.5% AGI). Also, health insurance premiums paid while unemployed only from IRA, SEP, SIMPLE IRA and SARSEP
Military-certain distributions to qualified military reservists called to active duty.
Returned IRA contributions-if withdrawn by extended due date of return, not including earnings on these returned contributions.
Rollovers-in-plan Roth rollovers or eligible distributions contributed to another retirement plan or IRA within 60 days.
Separation of service-the employee separates from service during or after the year the employee reaches age 55, (age 50 for public safety employees of a state in a governmental defined benefit plan.
Terminal illness-distribution made to a terminally ill employee, on or after the date the employee has been certified by a physician as having a terminal illness.
IRAs and IRA-based plans
Individuals can take distributions from their IRA, SEP-IRA or SIMPLE-IRA at any time. Taxpayers don’t need to show a hardship to take a distribution – they can just request a withdrawal from the financial institution that holds the account.
Distributions from a traditional IRA are subject to ordinary income tax. Withdrawals before age 59 ½ may be subject to the 10% early distribution tax unless an exception applies. Qualified distributions from a Roth IRA are not subject to income tax (generally, after you’ve had the Roth account for five years and reach 59 ½).
Loans Some plans may allow you to take loans if you meet certain plan limits on loan amounts and other requirements. You might be able to borrow up to the lesser of $50,000 or 50% of your account balance and must repay the loan over no more than 5 years. If the loan meets the plan rules and is repaid on time, these loans are not subject to tax.
Gift Tax Limit
The amount of the annual exclusion for gifts for 2024 is $18,000.
New Clean Vehicles purchased in 2023 and after
If you place in service a new plug-in electric vehicle (EV) or fuel cell vehicle (FCV) in 2023 or after, you may qualify for a clean vehicle tax credit.
At the time of sale, the seller must give you information about your vehicle's qualifications. Sellers must also register online and report the same information to the IRS. If they don't, your vehicle won't be eligible for the credit.
You may qualify for a credit up to $7,500 under Internal Revenue Code Section 30D if you buy a new, qualified plug-in EV or fuel cell electric vehicle (FCV). The Inflation Reduction Act of 2022 changed the rules for this credit for vehicles purchased from 2023 to 2032.
The credit is available to individuals and their businesses.
To qualify, you must:
Buy it for your own use, not for resale
Use it primarily in the U.S.
In addition, your modified adjusted gross income (AGI) may not exceed:
$300,000 for married couples filing jointly
$225,000 for heads of households
$150,000 for all other filers
The credit is nonrefundable, so you can't get back more on the credit than you owe in taxes. You can't apply any excess credit to future tax years. The amount of the credit depends on when you placed the vehicle in service (took delivery), regardless of purchase date.
Find information on credits for used clean vehicles, qualified commercial clean vehicles, and new plug-in EVs purchased before 2023.
The tax deadline is approaching!
With the April 18th tax deadline rapidly approaching, it's important to prioritize getting your taxes filed in a timely manner. Whether you're an individual or a business owner, filing your taxes on time can help you avoid costly penalties and interest charges. Here are some tips and information to help you prepare to file your taxes on time or request an extension if needed.
Gather Your Tax Documents: Start by gathering all your tax-related documents, including statements of income and expenses, W-2s, and 1099s. Make sure you have a clear understanding of all the deductions and credits you're eligible for to maximize your refund.
File Your Taxes: If you have all your tax documents in order, you can file your taxes on time by filling out the necessary forms and submitting them to the IRS. If you're unsure about how to file your taxes, consider working with a tax professional to ensure your return is accurate and complete.
Request an Extension: If you're unable to file your taxes by the April 18th deadline, you can request an extension by filing Form 4868 with the IRS. Keep in mind that this is an extension to file, not an extension to pay. If you owe taxes, you'll still need to estimate the amount you owe and submit that payment by the April 18th deadline to avoid penalties and interest charges.
Know Your Payment Options: If you owe taxes and can't pay by the April 18th deadline, there are still options available. You can work with the IRS to set up a payment plan, or consider paying with a credit card or personal loan (although keep in mind the interest rates on these options may be high).
In conclusion, don't let the April 18th tax deadline sneak up on you. Make sure you have all your tax documents in order and prioritize filing your taxes on time. If you're unable to file on time, consider requesting an extension or setting up a payment plan with the IRS to avoid penalties and interest charges. Remember, taking proactive steps now can help you avoid bigger problems down the line.
Year end - Tax Planning Tips
The Coronavirus Aid and Economic Security (CARES) Act loosens some tax laws that affect tax planning. Here are a few:
Maximize Charitable donations
This year whether you itemize you can deduct charitable contributions. If you take the standard deduction, (CARES) Act allows you to deduct up to $300. For those who can itemize, the CARES Act temporarily raises the ceiling on charitable deductions for cash contributions to public charities to 100% of your (AGI). Therefore, you may be able to reduce your taxable income or completely offset your taxable income. Also please use my enclosed noncash donation guide to track your noncash donations.
Losses
The stock market has been volatile. You may have incurred more losses than last year. However, these capital losses can be used to offset capital gains recognized this year. You may deduct up to $3,000 if married filing joint. You can always repurchase the stocks but must wait 31 days or the capital loss is a wash sale and is not deductible.
Distribution from qualified plans and IRAs
CARES Act allows qualified taxpayers impacted by COVID-19 to withdraw up to $100,000 from certain qualified plans and IRAs as a “coronavirus related distribution”. The 10% early withdrawal penalty will not apply, such distributions remain subject to federal income tax. The CARES Act allows a coronavirus related distribution to be taken into gross income over three years unless the taxpayer elects to take it all into gross income in 2020. If you received a coronavirus related distribution, you should determine which method of inclusion you will use. Thereafter, you may wish to adjust your withholding or estimated tax payments for 2020. The CARES Act also allows coronavirus related distributions to be repaid within three years.
529 Plans
Having a 529 plan is a great way to save for educational expenses. They grow tax-free and distributions for qualified higher education expenses are tax-free. Most states allow a deduction of your contributions to a 529 plan and some states give you a tax credit. Virginia for example allows a $4,000 per child deduction which reduces your state taxable income.
Medical Expenses
The medical expenses deduction will increase from 7.5% back to 10% of your AGI in 2021. See https://www.irs.gov/publications/p502#en_US_2019_publink1000178851 as to what medical expenses you can deduct. The CARES Act also expanded what is reimbursable for “qualified medical expenses" for (HSAs, MSAs, Health FSAs, and HRAs). Specifically, the cost of menstrual care products, over the counter items, and medication are now reimbursable. FSA use-or-lose rule allows up to a $500 carryover of FSA funds.
Traditional to Roth
Converting a traditional IRA to a Roth may save you in taxes in the long-term. It is a strategy that allows you to pay income taxes on some or all your retirement assets today rather than when you withdraw them in retirement. Distributions are generally not taxed when you withdraw contributions and earnings if your Roth IRA is at least five years old and at least age 591/2. If not, the earning portion may be subject to taxes and 10%penalty unless exceptions apply. No minimum distributions (RMD) is required.
Please contact me for more details.
Thank you for your business! Stay safe!
Second Economic Impact Payment
By now, if you had received the first stimulus payment through direct deposit, you may have noticed the second stimulus payment pending in your account. The IRS began paying the second stimulus on December 29th with checks going out starting on the 30th.
If you received a debit card in the past, a second card will be issued between now and January 4th. There is no action required for eligible individuals to get the second stimulus payment.
Anyone who received the first round of payments earlier this year but doesn’t receive a payment via direct deposit will receive a check, or in some instances, a debit card. Eligible individuals who did not receive either of the Economic Impact Payments this year will be able to claim it when you file your 2020 taxes in 2021. If new legislation is enacted to provide an additional amount, the Economic Impact Payment that has been issued will be topped off as quickly as possible.
US citizens and resident aliens who are not eligible to be claimed as a dependent on someone else’s income tax return are eligible for the second payment. The Economic Impact Payment is up to $600 for individuals or $1,200 for married couples and up to $600 for each qualifying child. The adjusted gross income limit is the same as the last stimulus for the full payment, ($75,000 for individuals and $150,000 for married filing joint and surviving spouses). For filers with income above those limits, the amount of the payment is reduced.
The IRS is currently updating the "Get My Payment " tool where you will be able to check the status of your second stimulus payment. Again, if you do not receive the payment you can still claim it on your 2020 tax return if you are eligible.
Thank you and Happy New Year!
Stimulus package - Plain and Simple
The Treasury and IRS announced that the economic impact payments would be distributed in the next few weeks. Here is what it is, plain and simple:
Tax filers with adjusted gross income up to $75,000 for individuals and up to $150,000 for married couples filing joint returns will receive the full payment.
For filers with income above those amounts, the payment is reduced by $5 for each $100 above the $75,000/$150,000 thresholds.
Single filers with income exceeding $99,000 and $198,000 for joint filers with no children are not eligible.
Social Security recipients and railroad retirees, who are otherwise not required to file a tax return, are eligible for the payment without having to file a return.
Will be paid through direct deposit. The treasury plans to set up a portal for individuals to provide banking information.
Eligible taxpayers who filed tax returns for either 2019 or 2018 will automatically receive an economic impact payment of up to $1,200 for individuals or $2,400 for married couples and up to $500 for each qualifying child.
TIP #1
If you have not yet filed your taxes for 2019, the IRS will use your 2018 tax filing to calculate the payment. If you have not filed your 2018 tax return, you will need to file to get the economic impact payment. If your 2018 (adjusted gross income (AGI) was significantly lower than your 2019 AGI, you should wait to file your 2019 taxes but file before July 15, 2020.
Tip #2
Because the due date for filing the federal income tax has been postponed to July 15, the deadline for making contributions to IRA is also July, 15th 2020.
Tip #3
Contributions to Health Savings Accounts (HSA's and Archer Medical Savings Accounts (MSAs) contributions are also extended to July 15, 2020.
Tip # 4
Student loan payments are deferred for ninety days. No penalty or interest will be assessed. For most companies, it is automatic. However, check with your lender to see whether you qualify. You may continue making your payments but towards your principal. You may need to log in and assign the amount directly to the principal.
Tip #5
Please call your mortgage company or visit their website if you need to apply for a forbearance. Be sure you get a full understanding of the details.
COVID-19 Tax deadline Update and AbcronEnterprises LLC is 100% online
By now you may have heard that the IRS has extended tax filing deadline.
Treasury Secretary Steven Mnuchin announced that taxpayers (individuals and businesses) would now have an additional 90 days, until July 15, 2020, to file their 2019 tax returns. Both the filing and payment deadlines are now the same date, removing any potential Tax Day confusion.
The Treasury still encourages taxpayers who may have tax refunds to file now to get their refund money.
Please continue to upload your documents through the portal. It is as simple as taking a picture of your documents or using the scan function in your notes app and uploading it. You may also email or fax them to 703-773-6915. Please remember to delete the photos of your documents from your phones.
With the current COVID-19 issue, Abcron Enterprises is equipped to complete your return remotely and digitally. A detailed review of your taxes can be done via phone, Zoom, Skype, Whatsapp, Hangout, or Facetime.
Thank you for your help with this. Please stay safe and thank you for your business and co-operation.
Regards,
Andrea Cronmiller, EA
Abcron Enterprises, LLC
http://www.abcronenterprises.com
Phone: 703-986-4958
Fax: 703-773-6915
New Year, New Rules!
Thank you for being a loyal customer!
Tax season is here and there are a lot of changes. The first change is my address. I have finally moved from Vermont back to Virginia.
The IRS will begin accepting tax returns on January 28th. The deadline for tax returns remains April 15th and for Partnerships, March 15th. Your checklist was sent password protected in a separate email earlier this month. I also sent you an invite to my new client portal. It is a secure way to share your documents with me. Please let me know if you have any questions regarding setting up your portal.
What's new for Individuals 2018 and 2019 tax years?
Alimony is no longer deductible by the payor spouse and includible in income by the recipient spouse in 2019. This rule only applies for divorce or separation instruments executed after December 31, 2018, and instruments executed on or before December 31, 2018, but modified after that date to include the new tax laws.
529 Plans will now allow a distribution of up to $10,000 per student to pay tuition expenses for public, private, or religious elementary or secondary school. The rule for post-secondary is unchanged.
Moving Expenses-2018-expires after 2025 Moving expense deduction and exclusion from income provision is allowed only to members of the Armed Forces, spouse and their dependents on active duty that moved because of military orders or permanent change in duty stations. The old moving expense rules are no longer available.
Personal Exemption-2018 is suspended for tax years 2018-2025
Standard Deductions-2018The standard deduction is as follows:Single or MFS - $12,000MFJ or QW- $24,000HOH- $18,000
65 or older, blind per person, per event:MFJ, QW, or MFS- $1,300Single or HOH-$1,600
Medical Expenses 2017 and 2018The threshold for deducting medical expenses is 7.5% of AGI for all taxpayers. It goes back to 10% in 2019.
Taxes Paid-Itemized Deductions-2018The new tax law limits deduction up to $10,000 ($5,000 MFS) for the sum of:state taxes withheldProperty taxes paidTaxes paid for prior year liability
Charitable Contribution-2018
the percentage limit for cash charitable contribution by an individual to a public charity is increased from 50 to 60%.No charitable donation is allowed for payment to a higher educational institution in exchange for which the payer receives the right to purchase tickets or seating at an athletic event.
Miscellaneous Itemized Deduction-2018Expenses that were subject to the 2% AGI limit deduction under the prior law are no longer deductible. These include:investment expensetax preparation feesunreimbursable employee business expensesrepayment of social security benefits
Child Tax Credit and Credit for Other Dependent-2018The child tax credit is increased to $2,000 per qualifying child under 17. The credit is phased out when modified AGI exceeds $400,000 for MFJ and $200,000 for all other taxpayers. There is also a new nonrefundable credit for other dependents of $500 is allowed for each person that is not a qualifying child but is a qualifying dependent under the dependency rules. Therefore a child over 16 that no longer qualifies for the child tax credit may be allowed a $500 credit assuming the dependency rules are met.
Penalty for Not Having Health insurance-2019
Effective 2019 the penalty tax under ACA not having the minimum essential health insurance is zero.
While not an exhaustive list of the changes, these are the most common. As a reminder, your "What If" worksheet was included in your 2017 tax return to give you an idea of what to expect with the new tax law changes.
Looking forward to talking to you in more detail when I do your tax return. Please do not hesitate to email, call or text me if you have any questions. Thanks again for your business.
Andrea Cronmiller, EA
Abcron Enterprises,LLC