Setting the Stage for a Smooth Tax Season

Preparing for Your 2023 Tax Returns & Planning Ahead for 2024

As we step into 2024, the annual ritual of preparing tax returns is upon us, often bringing a bit of anxiety. April 15, the standard deadline for filing tax returns, is a date etched in the minds of many. For 2024, tax day falls on a Monday.

To reduce any stress you might feel about preparing your tax returns, focus on taking the next step and planning ahead rather an avoidance.

Start by gathering all necessary documents early in the year:

• W-2s from employers
• 1099 forms for miscellaneous income
• Investment income statements
• Records of any deductions or credits you plan to claim

For those working with an accounting team, the ideal time to provide your documents is by late February. This allows sufficient time for your accountants to review, prepare, and file your returns accurately, while also leaving a buffer for any additional information or clarifications that may be needed.

In addition to the standard documentation, it’s also crucial to consider unique circumstances that can significantly impact your tax situation and require careful consideration.

Make note of any situations that might have arisen during the previous year, such as:

• Changes in your employment status
• Large transactions
• Shifts in your investment portfolio

As we delve into the specifics of preparing for your 2023 tax returns and planning for 2024, remember that early preparation and ongoing organization are your best strategies for a stress-free tax season.

Now that’s take a closer look at your tax and financial plans and discuss steps to reduce taxes and help you save for your future.

Navigating Required Minimum Distributions (RMDs)

A critical aspect for retirees is understanding Required Minimum Distributions (RMDs). Once you reach the age of 73, you’re required to start withdrawing a minimum amount annually from your retirement accounts. Neglecting this can lead to substantial penalties. However, there’s a silver lining. Rolling over retirement funds to a qualified charity can satisfy your RMD obligations without incurring taxes. It’s a strategy worth exploring, and with professional guidance, you can navigate any potential tax exposure efficiently.

The Evolving World of Digital Assets and Virtual Currency

The digital age has introduced a new category of assets to consider in your tax planning. Digital assets, including virtual currencies like Bitcoin and Ether, as well as Stablecoins and NFTs, are now recognized under U.S. income tax rules. The tax implications of selling, exchanging, or investing in these digital assets are significant, and the IRS is paying close attention. With the ever-evolving landscape of digital assets, it’s essential to stay informed and seek expert advice to understand the tax and investment consequences of your digital transactions.

Going Green: Leveraging Energy Tax Credits

In an effort to encourage eco-friendly practices, the Inflation Reduction Act of 2022 has introduced and expanded several tax credits. These include incentives for solar panels, electric vehicles (EVs), and energy-efficient home improvements. However, navigating these credits can be complex. Notably, for EV credits, the vehicle must have final assembly in North America. As you consider green investments, understanding these credits can yield substantial benefits for your current and future tax situations.

Understanding Beneficial Ownership Interest (BOI) Reporting

2024 also brings a new compliance requirement under the Corporate Transparency Act (CTA). Certain entities are now required to disclose their beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). While not a tax filing per se, this online report is mandatory for applicable businesses, with severe penalties for non-compliance. Understanding if and how this applies to your business is vital for staying on the right side of the law.

Tax Legislation

With the current political climate, there was minimal tax legislation that impacts your 2023 returns. Looking to the future, the potential for change is on the horizon, and we continue to closely monitor any potential tax legislation and update you accordingly.

Additional Tax Planning Areas

• Annual Retirement Plan Review: Review and maximize contributions to your retirement accounts, including IRAs and company plans, for proactive tax-savings.
• State and Local Taxes Impacts: Changes in work arrangements or residency can affect your tax obligations. Consider professional advice for these complex issues.
• Update Financial Records: Ensure your insurance policies and beneficiary designations reflect your current situation.
• Estimated Tax Payments and Liquidity Needs: With rising underpayment interest rates, review your withholding and estimated tax payments is more crucial than ever.
• Leveraging Health Savings Accounts (HSAs): HSAs offer a dual benefit of tax reduction and savings for medical expenses. If you have HSA funds, plan now so you can maximize these funds.

Laying the Groundwork for Tax Success

As you prepare your 2023 tax returns and look towards 2024, staying informed and proactive in your tax planning is key. By staying informed and seeking expert advice, you can effectively navigate these complexities and optimize your financial health. Whether it’s retirement planning, investing in digital currencies, or capitalizing on energy tax credits, each decision plays a crucial role in your overall tax strategy. Remember, effective tax planning is a year-round process, not just a tax season activity.