Written on 11/30/23 by Susie the Capuchin 🦍
You aren't supposed to spill trade secrets, but here we are unredacted. This is going to be the Tax Loophole Time Breaking Post to end all tax posts– below is everything you need to know about tax wizardry.
You've always had the power my dear, you just had to learn for yourself
2024 Glance:
The IRS announced that the nation’s tax season will start on Monday, January 18, 2022, when the tax agency will begin accepting and processing 2021 tax year returns.
The deadline for filing your 2023 is midnight on Monday, April 15, 2024, unless you file for an extension. People who live in areas that were affected by natural disasters may also have later deadlines.. Procrastination never ends well my friend 😉
Reporting rules changed for Form 1099-K, which is issued to taxpayers who received third party payments for goods and services that exceeded $600 in 2021. This may affect taxpayers who have income from part-time work, side jobs, or the sale of goods.
Some tax credits, such as the Child Tax Credit, the Earned Income Tax Credit, and the Child and Dependent Care Credit, return to 2019 levels, which means that affected taxpayers will likely receive a significantly smaller refund compared with the previous tax year.
The standard deduction for 2023 tax year is expected to increase to $14,000 for single filers and $28,000 for married couples filing jointly.
Loophole Portal #1: What are some actual ways I can use the tax code for my business goals?
The American Opportunity Tax Credit: This is an educational tax benefit that applies to the first four years of qualified higher education expenses. The credit is worth up to $2,500 per eligible student, and 40% of it is refundable.
The Saver’s Tax Credit: This is a credit for low- and moderate-income taxpayers who contribute to a qualified retirement plan, such as a 401(k) or an IRA. The credit can be up to 50% of the first $2,000 of contributions, depending on your income level.
The Inflation Reduction Act: This is a legislation that was passed in 2023 to restore fairness in the tax system. The act provides more funding for the IRS to increase compliance efforts on high-income earners, partnerships, corporations, and promoters who abuse the tax rules. The act also ensures that audit rates do not increase for those earning less than $400,000 a year, and adds new safeguards for those claiming the Earned Income Tax Credit.
The Foreign Earned Income Exclusion: This is a provision that allows U.S. citizens and residents who work abroad to exclude up to $108,700 of their foreign earned income from U.S. taxation in 2024, if they meet certain requirements.
The Charitable Contribution Deduction: This is a deduction that allows you to deduct the fair market value of your donations to qualified charitable organizations from your taxable income, subject to certain limits and rules. You can also deduct the expenses you incur while performing volunteer services for a charity, such as mileage, supplies, and uniforms.
2023 Federal Income Tax Brackets and Rates for Single Filers, Married Couples Filing Jointly, and Heads of Households | |||
Tax Rate | For Single Filers | For Married Individuals Filing Joint Returns | For Heads of Households |
10% | $0 to $11,000 | $0 to $22,000 | $0 to $15,700 |
12% | $11,000 to $44,725 | $22,000 to $89,450 | $15,700 to $59,850 |
22% | $44,725 to $95,375 | $89,450 to $190,750 | $59,850 to $95,350 |
24% | $95,375 to $182,100 | $190,750 to $364,200 | $95,350 to $182,100 |
32% | $182,100 to $231,250 | $364,200 to $462,500 | $182,100 to $231,250 |
35% | $231,250 to $578,125 | $462,500 to $693,750 | $231,250 to $578,100 |
37% | $578,125 or more | $693,750 or more | $578,100 or more |
Source: Internal Revenue Service |
Some good examples above of how to harmonize your business/s together
So: Why are taxes even important?
Well, they shouldn't be, the IRS could just calculate a percent from our income and give us a reciept but... here we are
I can't really get you excited for tax season, It's really hard myself, and the only thing going for me other than fourth cup of coffee is the idea any business could come to life with enough behind the scenes number magic, I see downtown Nicholasville's crumbling bricks being painted with new murals, our roads actually being paved, and get excited to see our work in action!
Look to our mainstreet and tell me you can't see the potential we have!
The lastest opportunities I've found lie in here:
Any dream is only that when its stays hope, it becomes reality from a plan. -Sum Pooh
What should I do now? Could we double profits this week?
Well, you could make another cup of coffee like I do when that question arises, find a passion, get a dog, but seriously
TJ Tax does all of this and more but heres some of what we do:
November Gameplan:
Check your withholding and make any adjustments soon. You can use the Tax Withholding Estimator to see if you need to change your withholding or make estimated or additional tax payments
Gather your tax documents and keep them for at least three years. You will need forms such as W-2, 1099-K, 1095-A, and 1099-NEC, as well as records of your income, expenses, and deductions
Confirm your mailing and email addresses with your employers, banks, and other payers. This will ensure that you receive your tax forms on time and avoid any errors or missing information
Review the new tax changes and updates for 2024. Some of them are: a new Direct File project for eligible taxpayers, an increase in the standard deduction, and a return to pre-pandemic levels for some tax credits
Maximize your retirement savings: You can contribute up to $23,000 to your 401(k), 403(b), or 457 plan in 2024, up from $22,500 in 2023. You can also contribute up to $7,000 to your IRA or Roth IRA, if you meet the income and eligibility requirements12. These contributions can reduce your taxable income and help you grow your retirement nest egg.
Claim your education benefits: If you or your dependents are pursuing higher education, you may be eligible for the American Opportunity Tax Credit or the Lifetime Learning Credit, which can reduce your tax bill by up to $2,500 or $2,000 per year, respectively. You may also deduct up to $2,500 of student loan interest, if you meet the income and other criteria.
Donate to charity: Other than saving your soul, You can deduct the fair market value of your donations to qualified charitable organizations, subject to certain limits and rules. You can also deduct the expenses you incur while performing volunteer services for a charity, such as mileage, supplies, and uniforms. However, you need to itemize your deductions to claim these benefits, which may not be worth it if your standard deduction is higher.
Plan ahead for major life events: If you are expecting to get married, divorced, have a child, buy a house, start a business, or retire in 2024, you should consider the tax implications of these events and plan accordingly. For example, you may want to adjust your withholding, make estimated tax payments, or consult a tax professional to avoid any surprises or penalties
These are some of the many ways we can actualize your lifes many goals together, come on by the Office! We can have your business goals actualized this week!
We're open 9 - 4 every day but Sunday at 713 North Main Street, Building 4, Nicholasville Kentucky
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