Grissom+CompanyCPA

7 YEAR-END TAX PLANNING TIPS FOR INDIVIDUALS As the holidays approach, it’s time to consider tax planning moves that will help lower your 2024 taxes, as well as set you up for tax savings in future years. Here are seven year-end tax planning ideas to consider. 1. STRATEGIZE ON THE STANDARD DEDUCTION VS. ITEMIZING This is a tried-and-true year-end tax planning strategy. If your total itemizable deductions for 2024 will be close to your standard deduction, consider making additional expenditures for itemized deduction items between now and year end to surpass your standard deduction. Those extra expenditures will allow you to itemize and reduce your 2024 federal income taxes. The 2024 standard deduction is $29,200 for married couples filing jointly, $29,200 for heads of household and $14,600 for singles and married couples filing separately. Note: Slightly higher standard deductions are allowed to those who are 65 or older or blind. The easiest itemizable expense to prepay is your mortgage payment due in January. Accelerating that payment into this year will give you 13 months’ worth of itemized home mortgage interest deductions in 2024. Contact the office to determine whether you’re affected by limits on mortgage interest deductions under current law. Next, look at state and local income and property taxes that are due early next year. Prepaying those bills between now and year end might lower this year’s federal income tax liability, because your total itemized deductions will be that much higher. However, under current law, the amount you can deduct for all state and local taxes is limited to a maximum of $10,000 ($5,000 if you use married filing separate status). Read full article:https://lnkd.in/gY9th4Dg

7 Year-End Tax Planning Tips for Individuals Tax-Saving Moves Businesses Should Consider Before Year End Want to Find Out What IRS Auditors Know About Your Industry? TAX TIPS Seniors: A Tax-Wise Alternative to Selling Your Appreciated Home Use It or Lose It: Your 2024 Gift Tax Annual Exclusion Recovering Lost Documents and Receiving Tax Relief After a Natural Disaster Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. If desired, we would be pleased to perform the requisite research and provide you with a detailed written analysis. Such an engagement may be the subject of a separate engagement letter that would define the scope and limits of the desired consultation services. 7 YEAR-END TAX PLANNING TIPS FOR INDIVIDUALS As the holidays approach, it’s time to consider tax planning moves that will help lower your 2024 taxes, as well as set you up for tax savings in future years. Here are seven year-end tax planning ideas to consider. 1. STRATEGIZE ON THE STANDARD DEDUCTION VS. ITEMIZING This is a tried-and-true year-end tax planning strategy. If your total itemizable deductions for 2024 will be close to your standard deduction, consider making additional expenditures for itemized deduction items between now and year end to surpass your standard deduction. Those extra expenditures will allow you to itemize and reduce your 2024 federal income taxes. The 2024 standard deduction is $29,200 for married couples filing jointly, $29,200 for heads of household and $14,600 for singles and married couples filing separately. Note: Slightly higher standard deductions are allowed to those who are 65 or older or blind. The easiest itemizable expense to prepay is your mortgage payment due in January. Accelerating that payment into this year will give you 13 months’ worth of itemized home mortgage interest deductions in 2024. Contact the office to determine whether you’re affected by limits on mortgage interest deductions under current law. Next, look at state and local income and property taxes that are due early next year. Prepaying those bills between now and year end might lower this year’s federal income tax liability, because your total itemized deductions will be that much higher. However, under current law, the amount you can deduct for all state and local taxes is limited to a maximum of $10,000 ($5,000 if you use married filing separate status). Read full article:https://lnkd.in/gY9th4Dg

401(k) limit increases to $23,500 for 2025, IRA limit remains $7,000 The Internal Revenue Service announced today that the amount individuals can contribute to their 401(k) plans in 2025 has increased to $23,500, up from $23,000 for 2024. The IRS today also issued technical guidance regarding all cost?of?living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2025 in?Notice 2024-80?PDF, posted today on IRS.gov. Highlights of changes for 2025 The annual contribution limit for employees who participate in 401(k), 403(b), governmental 457 plans, and the federal government’s Thrift Savings Plan is increased to $23,500, up from $23,000. The limit on annual contributions to an IRA remains $7,000. The IRA catch?up contribution limit for individuals aged 50 and over was amended under the SECURE 2.0 Act of 2022 (SECURE 2.0) to include an annual cost?of?living adjustment but remains $1,000 for 2025. 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 2025: For single taxpayers covered by a workplace retirement plan, the phase-out range is increased to between $79,000 and $89,000, up from 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 $126,000 and $146,000, up from between $123,000 and $143,000. For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the phase-out range is increased to between $236,000 and $246,000, up from 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 $150,000 and $165,000 for singles and heads of household, up from between $146,000 and $161,000. For married couples filing jointly, the income phase-out range is increased to between $236,000 and $246,000, up from between $230,000 and $240,000. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000. Read full article: https://lnkd.in/eJt46Cqt

Happy Halloween!

Tax season will be here before you know it! Here are a few tips to avoid tax-time stress: Stay Organized: Use an expense tracking app or spreadsheet to record and categorize expenses. Set up a filing system for financial documents and calendar reminders to avoid missing due dates. Plan Deductible Purchases: Consider moving forward with deductible items before year's end, such as education expenses, home office costs, or medical expenses. Maximize Retirement Contributions: Contribute to your 401(k) or IRA accounts to reduce your tax burden. 2024 limits are $23,000 for a 401(k) and $7,000 for an IRA, with extra contributions allowed for those 50 or older. Check Your Credits: Take advantage of tax credits for education, energy-efficient home improvements, and electric vehicles. Start your fall tax planning now to get organized and maximize your deductions and credits. Need help? Feel free to reach out to our team. We're here to assist with all your tax-related needs!

THE RISE OF CHECK KITING AND OTHER CHECK FRAUD While the use of paper checks has greatly diminished, thieves still view them as a source for stealing revenue. In fact, the Financial Crimes Enforcement Network warns that many thieves are returning to old-fashioned financial theft, using paper checks. That’s one reason why the U.S. Postal Service urges us to not send checks through the mail, where they may be vulnerable. “Check kiting” is another type of check fraud to be aware of. It relies on “float time.” That’s the period of delay between when a check is deposited in a bank and when the bank collects the related funds. In recent years, float time has narrowed, but it hasn’t disappeared. Unethical employees can use float time to falsely inflate an account balance, allowing checks that would otherwise bounce to clear. This type of crime usually involves multiple banks or multiple accounts in the same bank. STRATEGIES FOR THWARTING CHECK FRAUD Here are five strategies you can implement to keep people from using your company’s accounts for fraudulent activity, including check kiting. 1. Educate employees about bank fraud.?Teach them to recognize fraudulent transactions and related red flags. Workers who are aware of suspicious activities can bolster management’s commitment to preventing fraud. 2. Rotate key accounting roles.?Segregate accounting duties. By rotating tasks among staffers, if possible, you can help uncover ongoing schemes and limit opportunities to steal. 3. Reconcile bank accounts daily.?Make sure someone trustworthy, who isn’t involved in issuing payments, reconciles every company bank account. 4. Maintain control of paper checks.?Store blank checks in a locked cabinet or safe and periodically inventory the blank check stock. Also limit who’s allowed to order new checks. 5. Go digital.?The most effective way to prevent check fraud is to stop using paper checks altogether. Consider replacing them with ACH payments or another form of electronic payments. TIGHTEN UP The bottom line is, it’s a mistake to assume that check fraud is too old-fashioned to attract the attention of thieves. Vigilance in your banking processes can help thwart it. For help tightening your internal controls, contact the office.

IRS releases tax inflation adjustments for tax year 2025 The Internal Revenue Service announced today the annual inflation adjustments for tax year 2025. Revenue Procedure 2024-40?PDF?provides detailed information on adjustments and changes to more than 60 tax provisions that will impact taxpayers when they file their returns in 2026. Notable changes for tax year 2025 The tax year 2025 adjustments described below generally apply to income tax returns to be filed starting tax season 2026. The tax items for tax year 2025 of greatest interest to many taxpayers include the following dollar amounts: Standard deductions.?For single taxpayers and married individuals filing separately for tax year 2025, the standard deduction rises to $15,000 for 2025, an increase of $400 from 2024. For married couples filing jointly, the standard deduction rises to $30,000, an increase of $800 from tax year 2024. For heads of households, the standard deduction will be $22,500 for tax year 2025, an increase of $600 from the amount for tax year 2024. ? Marginal rates.?For tax year 2025, the top tax rate remains 37% for individual single taxpayers with incomes greater than $626,350 ($751,600 for married couples filing jointly). The other rates are: 35% for incomes over $250,525 ($501,050 for married couples filing jointly). 32% for incomes over $197,300 ($394,600 for married couples filing jointly). 24% for incomes over $103,350 ($206,700 for married couples filing jointly). 22% for incomes over $48,475 ($96,950 for married couples filing jointly). 12% for incomes over $11,925 ($23,850 for married couples filing jointly). 10% for incomes $11,925 or less ($23,850 or less for married couples filing jointly). Read full article:https://lnkd.in/gcjGDx4m

Social Security wage base announced for 2025 Individual taxable?earnings of up to $176,100 annually?will be subject to Social Security tax in 2025, the Social Security Administration (SSA)?said Thursday. The amount, an increase from $168,600 in 2024, is the wage base limit that applies to earnings subject to the 6.2% OASDI tax (old age, survivors, and disability insurance). At or above the wage base limit, the employee and the employer each will pay $10,918.20 in tax, an increase of $465 for each party in 2025. The Medicare hospital insurance tax of 1.45% each for employees and employers remained unchanged for 2025 (it has no wage limit). Individuals with earned income of more than $200,000 ($250,000 for married couples filing jointly and $125,000 for married taxpayers filing separately) pay an additional hospital insurance tax under Sec. 3103(b)(2) of 0.9% of wages with respect to employment (also unchanged). Self-employed individuals pay self-employment tax equal to the combined OASDI and Medicare taxes for both employees and employers (i.e., 12.4% of net self-employment income up to the OASDI wage base plus 2.9% in Medicare taxes on any amount of net self-employment income, with an offsetting above-the-line income tax deduction of half of the self-employment tax (also unchanged)). Read full article: https://lnkd.in/gc_Puyns

Remember, if the IRS needs to contact you, they will by mail first. If you receive any emails, calls, text messages, or DMs claiming to be the IRS stating you have an overdue tax or information about your tax refund, these are warning signs of fraud. If you do receive mail from the IRS, search their website for information on understanding your letter to verify if it is authentic. Be wary of anyone showing up to your home or business claiming to be from the IRS as they ended all unannounced visits in 2023. Contact the IRS to report anything you think is suspicious. Call us at (972-458-8864 for more tax information.

WHEN IS EMPLOYER-PAID LIFE INSURANCE TAXABLE? If the fringe benefits of your job include employer-paid group term life insurance, a portion of the premiums for the coverage may be taxable. And that could result in undesirable income tax consequences for you. The cost of the first $50,000 of group term life insurance paid by your employer is excluded from taxable income. But the employer-paid cost of coverage over $50,000 is taxable to you and included in the taxable wages reported on your Form W-2, even if you never actually receive any benefits from it. That’s called “phantom income.” HAVE YOU REVIEWED YOUR W-2? If you’re receiving employer-paid group term life insurance coverage in excess of $50,000, check your W-2 to see the impact on your taxable wages. If there’s a dollar amount in Box 12 (with code “C”), that’s the amount your employer paid to provide you with group term life insurance over $50,000, minus any amount that you paid for the coverage. You’re responsible for any taxes due on the amount in Box 12, including employment tax. The amount in Box 12 is already included as part of your total “Wages, tips and other compensation” in Box 1 of the W-2. It’s the amount in Box 1 that’s reported on your tax return. WHAT ARE YOUR OPTIONS? If the tax cost seems too high for the benefit you’re getting, ask your employer if they have a “carve-out” plan, which allows certain employees to opt out of the group coverage. If there’s no such option, ask your employer if they’d be willing to create one. Carve-out plans vary, but one option is for your employer to continue to provide $50,000 of group-term coverage at no cost to you. Your employer could then provide you with an individual permanent policy for the balance of the coverage. Or it could pay you a cash bonus representing the amount it would have spent for the excess coverage, and you could use that money to pay premiums for an individual policy. There would still be tax consequences, but the tax liability might be smaller and the coverage might better meet your needs. WE CAN HELP You may have other tax questions about life insurance. Feel free to contact the office for answers at 972-354-4518.