TAX YEAR 2024 POTPOURRI

Written By Christian Christiansen

January 01, 2025

TAX POTPOURRI

For Everyone

  • Estimated tax payments for Q4 of 2024 are due January 15.

  •  The IRS re-opens for business January 15 for trusts, partnerships, and corporations, but no word yet on when individuals can file.

  •  Regular filing deadlines (without extension):

o  March 17 for partnerships and S-Corps with calendar year filing schedule

o  April 15 for individual returns, C-Corps on a calendar year, estates, trusts, and 990 & 990-T filers

o  May 15 for most non-profits

  •  The IRS underpayment penalty now sits at 8% of tax liability over $1,000 still unpaid come April 16.  Taxpayers must pay at least 90% of the 2024 liability they will owe or 100-110% (depending on income) of their 2023 liability to avoid the penalty.

  • The California FTB maintains an underpayment interest rate of 7% from January to June 2024 and an 8% rate for the remainder of 2024, also.  Why the split?  Perhaps, a legislative maneuver to make up for lost revenue.

  •  IRA contributions rest at $7,000 annually, but for those 50 and older, $8,000.  Remember to consider spousal contributions.

  •  Californians may notice their State Disabiliby Insurance (SDI) paycheck withholding has gone up significantly.  Again, due to budget shortfalls, the 2025 rate is 1.2% of wages whereas it used to be a lower, fixed dollar figure.

  •  Take time in 2025 to review each year your beneficiary designations on bank accounts, stock accounts, life insurance, IRA accounts, and pension accounts.  You may be (unpleasantly?) surprised!

For Individuals

  • Itemizers who have qualified medical expenses can use 21 cents/mile for travel to and from appointments and charitable mileage is (still) rated at 14 cents per mile.

  •  SECURE 2.0 reminders:

o  NEW for 2025!:  No RMDs for Roth 401(k), just like Roth IRAs

o  529 educational plans can rollover to Roths, with a lifetime rollover limit of $35,000

  •  Qualified retirement plan participants aged 60-63 may contribute an additional $11,250 for 2025.

  •  NEW:  Reporting virtual currency transactions now requires tracking & reporting per wallet and per account:

o  Separate accounting for each wallet and exchange account

o  Tracking unused basis per-wallet, not first in first out, for instance

o  Tax reporting that distinguishes an asset’s cost basis (acquisition) and disposition (sale).

  •  Electric vehicle credits can be transferred to the dealer as a downpayment.  Taxpayers must now include the VIN when claiming the credit.

  •  The Energy Efficient home solar credit does not apply any more to leased or used property installed, just to owned and new equipment.

  •   The Social Security Administration says full retirement age for those born in 1960 and onward is age 67.

  •  If charitably minded, consider a donor-advised fund in a high-income year which allows you to “bunch” donation deductions in one year while the donation dollars themselves are distributed over several years.

 

For Small Business Owners

  • Deadline for forms 1099 to contractors is January 31

  •  Not tax-related, per se, but often a question I hear, the Beneficial Ownership Information reporting has been stayed by a federal District Court, so if you have not filed the BOI report, you win!… for now.

  •  SECURE 2.0 business reminders:

o  For 401(k) plans starting in 2025, employers of 11 or more employees must auto-enroll those eligible, but employees may opt out.

o  Employers can match an employee’s loan payment in lieu of matching the employee’s actual 401(k) contribution.   

  •  The 2025 standard business mileage rate was 67 cents per mile, but you must keep a contemporaneous log that itemizes miles driven, time, place, and business purpose.

  •  Important:  If you incur a Net Operating Loss, keep all your original spreadsheets that establish your claim at least 3 years after you used the NOL, not from when the NOL was created.

 

Estate Planning

  • Review your estate plan: Review your estate plan to ensure it is up-to-date and reflects your current financial situation. Consider consulting with an estate planning attorney to ensure your plan is comprehensive and effective.

  •  Consider gifting assets to heirs to take advantage of the annual gift tax exclusion to reduce the size of your taxable estate.  The annual gift exclusion per person (not couple) is $19,000 for 2025 and may be given to anyone, regardless of relationship.  I can think of several people to be generous to, how about you?

 

Till we talk again, please enjoy a wonderful 2025!

Your friend and tax preparer,

Christian Christiansen, EA

Christian Christiansen
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Tax Year 2023 POTPOURRI