The importance of tax planning cannot be understated. Therefore, it’s essential to keep strong financial records all year long. The beginning of a new year marks an opportunity to get a jump-start on tax planning and preparation initiatives that will make the months ahead easier.
There are varying tax law changes on the horizon and the April 15, 2024 filing deadline. Now is the time to start plotting your tax preparation and planning steps to ensure that your annual tax return is error free, and your overall taxes are minimized.
What Changes in Tax Laws for 2024 Might Affect Individuals and Businesses?
2023 and 2024 ushered in a range of tax law changes as the country continued its slow recovery from the Coronavirus pandemic.
As such, many taxpayers will notice differences on both their 2023 and 2024 returns, which may include the following:
- New tax brackets – The Internal Revenue Service (IRS) routinely adjusts tax brackets year to year based on inflation, and 2023 and 2024 are no exception. The 2023 tax year made headlines across the country, as the tax brackets for 2023 were noticeably higher than in the past.
- Student loan changes – Several changes have gone into effect regarding student loans. Therefore, if you were required to restart student loan payments in the fall of 2023 following the Coronavirus pandemic-related moratorium, you may be eligible for some hefty and corresponding tax deductions.
- New incentives for energy efficient home improvements – In 2023, the value of several credits for energy efficiency improvements expanded, particularly the Energy Efficient Home Improvement Credit (EEHIC) and the Residential Clean Energy (RCE) Credit. In addition, if you made a few green changes over the past year (like buying an electric vehicle), you may be eligible for even more credits and/or deductions in the months and years ahead.
- Retirement plan changes – The laws surrounding retirement plan contributions and distributions tend to change regularly, and tax years 2023 and 2024 are no exception. Suppose you contributed or withdrew from a retirement account over the past few months. In that case, it’s essential to consult with your tax planning services provider to ensure any immediate tax law changes do not impact your retirement savings or your budget.
Strategies for Effective Tax Planning – What You Can Do Now
As taxpayers prepare to file their 2023 returns and look ahead to 2024 budgeting strategies, there are a few steps you can take now to ensure precise planning in the months to come.
- Review your records – Smart tax preparation requires diligent record keeping, which starts with saving and tracking all personal and business expenses. Ensure the different costs are separated and easy to review so that your business and individual deductions or credits are not intermixed.
- Start planning your 2024 tax moves – Perhaps 2024 is the year where you’ll make a big (and deductible) purchase or investment that will improve your business or side gig and move you into a lower bracket when the inflation-related adjustments come into play. Again, your tax planning services provider can help you navigate this financial terrain and determine the smartest financial moves for your unique financial situation.
- Review your investment portfolio – This may be a good time to diversify your investment portfolio by exploring new opportunities, contributing more to your retirement accounts, or investigating new types of retirement accounts that may have more significant financial rewards down the road when it comes to annual taxes, (like Roth IRAs.) Again, an expert in taxes and financial planning can be your best resource when identifying the exact right moves for you.
- Review your income, debt, and estimated taxes – Do you know how much taxes you’ll owe by April 2024? What about April 2025? Now is the perfect time to take stock and create an estimate so there are no unpleasant surprises on the horizon.
Smart Tax Preparation and Planning Starts with Saddock Advisory
Saddock Advisory can help with every step of comprehensive tax planning and preparation all year, not just when your annual taxes are due.
Our tax and financial experts continually monitor tax law changes and determine how they may impact our clients to create and revise strategies that will save money in the long run.
Reach out to us today for a free consultation to start a discussion about what looming tax law changes may affect your bottom line. The professionals at Saddock Advisory are always available to assist with your distinctive tax planning and preparation strategies, and to make your tax preparation streamlined and easier year after year.
