INDIVIDUALS:
- Consider a Roth-IRA conversion to take advantage of low taxable income or historically low tax rates.
- Consider non-taxable gifts ($18,000 per person in 2024).
- For individuals aged 70.5 years or older, make your charitable gifts out of your pre-tax IRA accounts to reduce taxation on IRA distributions (called a Qualified Charitable Distribution or QCD). This is especially important if you are claiming the Standard Deduction and not benefiting from itemizing charitable deductions on your tax return. A reduction of your Adjusted Gross Income (AGI) can potentially lower the taxation on your social security benefits and reduce the cost of your Medicare premiums.
- Surviving Spouses whose spouse passed away within the last five (5) years should review if a Form 706, Estate Tax Return, should be filed to claim the deceased spouses’ unused estate tax exemption (DSUE). The return must file a Portability Election to carry over the unused exemption.
- This is extremely important since the current high estate tax exemption of $13,610,000 in 2024 is currently scheduled to be reduced back to $5 million plus inflation adjustment on January 2026.
Schedule a meeting with us to review estate planning concepts to potentially take advantage of the historically high estate exemption. This is extremely important since the current estate tax exemption of $13,610,000 in 2024 is scheduled to be reduced to $5,000,000 plus inflation adjustment (approximately $7,000,000) on January 1, 2026. - For Worthless or Abandoned Partnership Interests, taxpayers need to take affirmative steps to terminate their ownership interest so they can claim a taxable capital loss on their tax returns.
- Based upon the draft bills for a new CA payroll tax if you don’t have adequate long-term care coverage, wage earners would have a new payroll tax. Call us to review if purchasing a policy now for LTC makes sense for you and your family (which might prevent the imposition of the tax on your wages). Great action item if you were considering LTC coverage in the future.
TAX & ESTATE PLANNING DINNER SEMINAR WEDNESDAY, NOV. 13TH, 5PM TO 7PM PRESENTERS: PETER & GRANT PRESCOTT, CPAs, AND DAVIS SHERAK, ATTORNEY AT LAW PLEASE CONTACT US TO RESERVE YOUR SPOT AS SPACE IS LIMITED
BUSINESSES:
- For Sole Proprietors, consider forming an S Corporation for legal liability protection and to minimize the Social Security and Medicare taxes paid. This is especially important now that the Social Security Wage Base has been increased to $176,100 for Tax Year 2025 (up from $168,600 for 2024) and the State Disability Insurance (SDI Rate) is now 1.1% and is charged on 100% of your gross wages (previously 0.9% and capped at $153,164 in 2023).
- For S Corporations, LLCs, and Partnerships, take advantage of the new Pass-Through Elective Tax (PTE) payments which allow the business to pay the California personal income tax on the income generated by the S Corp/LLC/Partnership. By having the business pay your personal income tax for the shareholder, the shareholder receives tax savings of at your marginal tax bracket times the amount of tax paid. This can be as high as 37% savings on the amount of CA tax paid on behalf of the shareholder.
- Review your retirement plan to determine which plan is the best option based upon your tax bracket, how much you want to contribute and how much you have to contribute for others. The most relevant plans for your consideration are 401(k), Defined Benefit and Simple-IRA plans. Based upon recent contribution limits which have increased due to inflation adjustments, a Single 401(k)/Profit Sharing participant who is age 50 can contribute as much as $76,500 for Tax Year 2024.