Weekly Digests

How lucky we were to have such beautiful 60-degree weather this week; I continued to be able to take barefoot walks on the beach each morning…until this morning when the temperature here “plummeted” to 48 degrees (probably what is to be expected for a late October morning).  It was still so nice to be able to get out with layers of fleece, a down vest, hat and SNEAKERS!  This week Ramona and I met with our website designers and beginning in January we will be revamping our website and our blog/newsletter format. We plan to continue to share relevant tax information and best business practices via weekly blog posts.  Our plan is to share our photos and firm “news” via a monthly summary email which will include blog highlights/summaries, a practice we started years ago but replaced with our weekly updates.  We are looking forward to this change and hope you continue to enjoy our posts.

Fall photos 🍂from friends on the east coast….

A week of sunrise beach photos…

I am hoping you have wonderful plans for the weekend and are all set with candy for our trick-or-treaters (we have tested some of the snack packs to make sure they will be good enough to share)

Weekly Take Away

We are currently holding our last few 2023 tax year exit appointments with those clients who were just recently able to send us that last “elusive” document. We hold these meetings via video conference showing results as we walk them through their tax return summary.  During these meetings we check to confirm they are following along and agree with our recommendation(s).  It is a time to connect, project, and allay fears and concerns about current and future finances.  As we work together we hear a familiar refrain “I trust you 100%,” and accolades about how they feel well taken care of by my staff and me.  It’s hard work, long hours but knowing we are appreciated is it’s own reward.

TAX ISSUES/TAX PLANNING

Annual Inflation Adjustments Announced for Tax Year 2025 (IR.2024-40)

On Tuesday the IRS announced its annual inflation adjustments for over 60 tax provisions for tax year 2025.  These include an increase in the standard deduction for married couples ($30,000 an increase of $800);  single individual filers and married couples filing separately will have an increase of $400 ($15,000), while the standard deduction will be $22,500 for heads of household (an increase of $600).  These adjustments generally apply to the 2025 tax returns that will be filed in 2026, but it’s never too early to start planning.  IRS Rev. Proc. 2024-40 provides details about these annual adjustments and also includes new tax rate schedules.  It is 27 pages of changes, here are some highlights:

Income rate brackets:  For tax year 2025, the top tax rate is 37% for individual single taxpayers with incomes greater than $626,350 ($751,600 for married couples filing jointly).

Income rate brackets:  For tax year 2025, the top tax rate is 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).

Estates:  Estates of decedents who die during 2025 have a basic exclusion amount of $13,990,000, increased from $13,610,000 for estates of decedents who died in 2024.

Gifts: The annual exclusion for gifts increases to $19,000 for calendar year 2025, rising from $18,000 for calendar year 2024.

Adoption Credits: For tax year 2025, the maximum credit allowed for an adoption of a child with special needs is the amount of qualified adoption expenses up to $17,280, an increase from $16,810 for tax year 2024.

Health Savings Accounts:  Self-only coverage medical savings account plans must have an annual deductible of not less than $2,850, but not more than $4,300; the maximum out-of-pocket expense amount is $5,700.  For family coverage the annual deductible is not less than $5,700 but not more than $8,550, the maximum out-of-pocket expense limit is $10,500

Employee Salary Reductions for Contributions to Health Flexible Spending Arrangements:  Contributions to health flexible spending arrangements rises to $3,300. For cafeteria plans that permit the carryover of unused amounts, the maximum carryover amount rises to $660

Qualified Transportation Fringe Benefits:  The monthly limitation for the qualified transportation fringe benefit rises to $325, increasing from $315

Monthly Limitation for Qualified Parking:  The monthly limitation for qualified parking rises to $325

Earned Income Tax Credit (EITC):   For qualifying taxpayers who have three or more qualifying children the 2025 EITC will be $8,046, an increase from $7,830 over tax year 2024

IRS News Release: Tax Tip 2024-83: IRS Offers Tax Relief After Major Disasters

“Disaster relief can be authorized by the IRS when certain criteria from the Federal Emergency Management Agency are met. Generally, the IRS will authorize disaster tax relief to all areas identified on a major disaster declaration if FEMA identifies at least one area qualifying for their Individual Assistance program.

Those who have been affected by a disaster can visit Tax relief in disaster situations on IRS.gov for information on what tax relief applies to them and other resources that will help them recover.

Tax relief:
The following types of tax relief are a few of the ways the IRS helps after a major disaster.

• The IRS gives taxpayers more time to file and pay: Taxpayers whose address of record is in an area qualifying for IRS disaster tax relief will automatically receive extra time from the IRS to file returns and pay taxes. The IRS’s disaster assistance page provides updates and links to resources. Information is also available on the IRS X account (formerly Twitter). Taxpayers can also call the agency’s disaster line at 866-532-5227 with questions.
• Disaster victims may qualify for a casualty loss tax deduction: Affected people who have lost or damaged property due to a federally declared disaster may qualify to claim a casualty loss deduction. They can claim this on their current or prior-year tax return. This may result in a larger refund.
• Taxpayers can apply for a disaster loan or grant: The Small Business Administration offers financial help to business owners, homeowners and renters in a federally declared disaster area. To qualify, a taxpayer must have filed all required tax returns.

You can also check for details as discussed in our recent blog posts from September and October

ECONOMY

Will the US Economy Keep Up the Pace in the Fourth Quarter?

As reported in this recent article from Investopedia.com:  “Economic momentum is projected to slow in the fourth quarter, but economists expect consumers will provide enough power to fuel growth through the year’s end:

• Economic growth is expected to slow down in the fourth quarter, possibly making the year’s final months its weakest.
• Consumer spending is expected to fuel continued growth, while economists keep an eye on a labor market that is sending mixed signals.
• Sectors hardest hit by high interest rates are also expected to show improvement as the Federal Reserve’s interest rate reductions start to have an effect.”

US Economy is Partying, But Voters are Hungover

As reported in this recent article from Reuters.com:  “With less than a month to go before the U.S. elections, the American economy is in arguably in the best shape it has been prior to any presidential contest in recent history. Unemployment is at a more than two decade low. Gasoline prices aren’t as high as it may seem. Even inflation looks better. While Vice President Kamala Harris will likely not claim the full benefit of incumbency following President Joe Biden’s decision not to seek a second term, the economy’s recent performance should put the wind in her sails and blunt one of Republican nominee Donald Trump’s main arguments against her.”

Nearly 80% of Women & Minority U.S. Business Owners Anticipate Revenue Growth in the Coming Year

As reported in this recent article from NewsRoom.BankofAmerica.com:  “Majority of women and minority business owners surveyed plan to expand their businesses over the next 12 months. This is according to the 2024 Bank of America Women & Minority Business Owner Spotlight, published in partnership with Bank of America Institute.  The survey of more than 2,000 small and mid-size business owners across the country explores sentiments about business outlook, access to capital, how they manage their employees, and how they interact with their community. This annual survey samples a general population of small and mid-sized business owners and includes specific insights into the perspectives of women, Hispanic-Latino, Black/African American and AAPI business owners.

Majority of Americans Feel Worse Off Now than 4 Years Ago

As reported in this recent article from New.Gallup.com:  “Economic Confidence Index remains negative at -26.  More than half of Americans (52%) say they and their family are worse off today than they were four years ago, while 39% say they are better off and 8% volunteer that they are about the same. The 2024 response is most similar to 1992 among presidential election years in which Gallup has asked the question.  The latest findings are from a Sept. 16-28 poll, which also finds differences among partisans’ perceptions on this measure — Democrats (72%) are much more likely than independents (35%) or Republicans (7%) to view themselves as “better off.”

The higher-than-usual percentage of U.S. adults who say they are worse off this year is largely owing to Republicans’ much greater likelihood to say this than opponents of the incumbent president’s party had been in prior election years. Likewise, the higher-than-usual percentage of “better off” responses in 2020, when Donald Trump was in office, was attributable to Republicans’ much greater likelihood to give that response than supporters of the incumbent president’s party did in prior election years.

Americans’ perceptions of whether they are better off have been related, historically, to how they feel about the U.S. economy, as reflected in Gallup’s monthly Economic Confidence Index (ECI).  Gallup’s ECI summarizes Americans’ evaluations of current economic conditions (as excellent, good, only fair or poor) and their outlook for the economy (whether they believe it is getting better or worse).  The index has a theoretical range of +100 (if all Americans rate current conditions as excellent or good and say the economy is getting better) to -100 (if all Americans rate the economy as poor and say it is getting worse). In Gallup’s trend of these measures since 1992, the highest ECI score was +56 in January 2000, and the lowest was -72 in October 2008.

In 1992, a relatively low 38% of Americans said they were better off with the ECI at -37; and the incumbent, George H.W. Bush, lost. In 2004, when nearly half said they were better off and the ECI was +1, and George W. Bush won reelection. Similarly, 45% felt better off in 2012 when the ECI was -1, and Barack Obama won. Yet, in 2020, while 55% claimed to be better off and the ECI was -4, Trump lost his reelection bid — a sign that noneconomic factors were paramount to voters that year.

Gallup’s latest measurement of Americans’ economic views, from an Oct. 1-12 poll, puts the ECI at -26 — one of the worst election-year readings, along with the 39% “better off” reading from September.”

The New E-Commerce Innovation Imperative for Retailers

As reported in this recent article from BCG.com:  “Technology is disrupting every aspect of the e-commerce shopping journey and fundamentally altering consumer behavior. But the benefits for retailers have accrued unevenly so far. A recent survey by BCG and World Retail Congress revealed that 60% of retail innovation leaders are prioritizing investments in e-commerce.

As technology disrupts e-commerce, most US retailers aren’t keeping pace with the market leaders. Retail innovators are setting themselves apart by:

• Adopting third-party marketplaces, which allow retailers to expand their offerings by providing the existing ecosystem of sellers a new route to market.
• Deploying a robust social commerce strategy, embracing social media influencers and interactive content to boost market presence and customer loyalty.
• Implementing GenAI along the value chain to streamline product cataloging, enhance customer interactions, and explore innovative applications to drive operational efficiency and personalized experiences.”

Home Rent Prices Vary Depending…

According to this report from Rent.com:   “Rents are holding steady nationally but could look very different depending on where you are in the country. In some areas, especially in the Sun Belt states, multifamily building completions have been at historic highs, and some metros now have too much supply. This has prompted an uptick in rent concessions from some property managers to attract prospective tenants.

In other areas, where construction has been more limited, rents are rising. Demand from young renters and a fast-growing renter population are also contributing factors.

Top Takeaways from this Report:

• The U.S. median asking rent rose 0.6% year over year in September to $1,634.  This is the sixth consecutive increase following 11 months of decreases. In general, rents have held steady for the past year and a half since they hit their record high of $1,700 in August 2022. And on a monthly basis, rents actually fell by 0.2% ($2) compared to August, continuing to remain at highs well above the pre-COVID-19 pandemic period, according to real estate brokerage Redfin.
• However, rents actually fell 0.2% ($2) on a monthly basis, down from $1,636 in August
• Washington, D.C., Virginia Beach, and Cleveland saw the biggest increases; Jacksonville, Raleigh, and San Diego posted the biggest decreases”

GENERAL RESOURCES

• IRS resources for stimulus payments:
  • Use the Get My Payment tool to check on EIP payment status
  • Eligibility and general information about Economic Impact Payments
  • A list of frequently asked questions for stimulus payments
• IRS information about the Advance Child Tax Credit Payments
  • A list of frequently asked questions on the advance Child Tax Credit Payments
• IRS links for disaster relief
• SBA link for Disaster assistance
• FinCEN link for BOI reporting
• The best source for up-to-date and accurate health information is the Center for Disease Control (CDC)
• Our prior blog posts, videos and prior weekly newsletters
• Entrepreneur put together a listing of free tech resources for remote work
• The Consumer Financial Protection Bureau has warnings about COVID-related scams
• The New York Times has an online newsletter on K-12 and higher education
• The Wall Street Journal has a collection of articles on education
• The Louvre has digitized 482,000 artworks from its collection
• How to create a strong password

We sincerely hope that you and your family are well and remain well. If you have any questions or concerns, don’t hesitate to reach out to us. We are here for you.

If you need help with your accounting, want to create a tax minimization plan, want to discuss your business growth plan or your finances, are concerned about retirement goals or need to be held accountable for your 90 day action plan, contact us for a complimentary discovery session or an appointment to just get started

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Contact us if you have any questions or want to discuss the next steps for your business.