10 Topics to Discuss with Clients

Office accounts. Encourage shoppers to think about maximizing contributions to their office plans to take full benefit of any employer match profit.

Conventional IRAs. Maxing out contributions to conventional IRAs is an alternative choice. See beneath for the newest quantities that may be put aside this 12 months. Modified adjusted gross earnings (MAGI) limits for contributions to conventional and Roth IRAs elevated in 2024, so you should definitely review MAGI eligibility thresholds.

If allowed beneath an employer’s plan, people can carry over as much as $640 in unused well being versatile spending account (FSA) quantities. Though the rollover choice applies to the employer’s plan 12 months moderately than the calendar 12 months, your year-end evaluation might embody a have a look at how shoppers have tapped their FSA to this point and whether or not they need to make modifications in future years. Shoppers with dependent-care FSAs can save as a lot as $5,000 per household or $2,500 per filer if they’re married however submitting individually in 2024.

Now can also be the time to debate maximizing well being financial savings account (HSA) contributions with shoppers who’ve high-deductible well being plans (HDHPs). Though this could be a pretty complicated planning space, right here’s a common overview of how HSA limits work:

Don’t neglect to debate pro-rated versus “last-month-rule” contributions for shoppers who had an HDHP for a part of 2024.

Shoppers on the brink of a tax bracket could possibly put themselves within the decrease one by deferring some earnings to 2025. Listed below are a number of thresholds relevant in 2024 to bear in mind:

• 37 % marginal tax price: Taxable incomes exceeding $609,350 (particular person), $731,200 (married submitting collectively), $609,350 (head of family), and $365,600 (married submitting individually)

• 20 % capital positive aspects tax price: Taxable incomes exceeding $518,900 (particular person), $583,750 (married submitting collectively), $551,350 (head of family), and $291,850 (married submitting individually)

• Further Medicare tax: For shoppers with W-2 or self-employed earnings above sure MAGI thresholds, complete Medicare taxes will likely be 2.35 % and three.8 %, respectively

• 3.8 % surtax on funding earnings: The lesser of internet funding earnings or the surplus of MAGI better than $200,000 (particular person), $250,000 (married submitting collectively), $200,000 (head of family), and $125,000 (married submitting individually)

12 months-end monetary planning actions ought to embody a overview of capital positive aspects and losses in your shoppers and an evaluation of whether any portfolios need rebalancing. This course of might reveal tax-planning alternatives, equivalent to harvesting losses to offset capital positive aspects.

Charitable contributions donated on to a professional charity or a donor-advised fund (DAF) could also be eligible for a federal tax deduction. Take into account, although, that this technique is barely useful if shoppers itemize deductions. So, it’s worthwhile for shoppers to satisfy with their tax professionals to debate whether or not their charitable contributions and different deductions will exceed their customary deduction. A technique you may obtain that is by bunching the annual presents usually revamped a number of years into one lump-sum present in a single 12 months.

Deductions on DAF contributions are capped at 60 % of AGI for money and 30 % of AGI for long-term appreciated securities. On the whole, these might be carried ahead for the 12 months of donation, plus a further 5 years till the total deduction quantity has been exhausted.

Certified charitable distributions (QCDs) could also be a consideration as effectively: Shoppers ages 70½ and older could make a QCD of as much as $105,000 on to a charity; married joint filers might exclude as much as $105,000 donated from every partner’s IRA.

Whereas these distributions to charity don’t qualify for a charitable tax deduction, they do have earnings tax advantages and might fulfill the RMD requirement. SECURE 2.0 expanded the allowable recipients of QCD distributions to charitable the rest trusts and charitable present annuities, beneath which the consumer or the consumer’s partner might retain an earnings curiosity, with the rest payable to charity. QCDs to such “split-interest entities” are restricted to a lifetime restrict of $50,000.

Various minimal tax (AMT) exemption limits elevated in 2024 to $85,700 for single tax filers and $133,300 for married joint filers. Relying on AMT projections, shoppers might need to wait till January 2025 to train incentive inventory choices.

Shoppers who could also be topic to an estimated tax penalty can ask their employer to regulate their withholding to cowl shortfalls (through Kind W-4). The IRS tax withholding estimator could be a helpful useful resource right here. They might additionally discover utilizing Form 1040-ES to make their estimated quarterly funds for earnings that’s not topic to withholding.

After the Supreme Courtroom overturned the Biden administration’s proposed scholar debt cancellation plan, federal scholar loans resumed accruing curiosity on September 1, 2023, with funds resuming as of October 2023. These funds had been topic to a 12-month “on-ramp transition interval,” throughout which default was waived for nonpayment. The on-ramp interval ended on September 30, 2024.

Moreover, the Supreme Courtroom lately determined to not carry the injunction positioned on President Biden’s Saving on a Valuable Education (SAVE) plan—which changed the Revised Pay As You Earn (REPAYE) plan. All debtors at present enrolled within the SAVE Plan have been positioned in forbearance.

In line with the Federal Student Aid website, debtors ought to hear from their mortgage servicers concerning subsequent steps. For the newest info, recommend your shoppers seek the advice of this helpful webpage and join updates on the U.S. Department of Education website.