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December 1st, how did this happen, I feel like it was just summer a week or two ago and I was working in my garden.  I guess the holiday decorations 🕎🎄that have sprung up this past week are a sure sign that it’s holiday time, even if we here in NYC are experiencing “warm” 37–48-degree weather. It’s winter somewhere, certainly in Michigan where we spent last week.  It is certainly winter given the temperature and “lake effect” snow.

The week started out a bit cold but we were able to sleep late as Michigan is at the western edge of EST and sunrise was at 8 AM,  it was like  daylight savings time again, like turning the clocks back ⏲️…

It was very cold (20 degrees mid-day) but very pretty and it was our granddog Rory’s first snow fall.  He did pretty well bundled in his down coat as he retrieved his frisbee at the local dog park, but was happiest sitting in his bed in his warm house…

Back in New York, just yesterday we bundled up with a layer of fleece under our down jackets, then went for our walk on the beach at sunrise, nice to have sun, sand and snow all in one week!

Riis park is beautiful and deserted this time of year (and that’s how we like it)…

When we were all together in our NY office, it took us at least a hour to pick a location, pose and select the one photo where we were all smiling (rather than talking or laughing), we were much more efficient yesterday morning during our weekly huddle…

My new greeting and wish is for you to have a good day, every day, so… have a good day and a great weekend.  Hopefully the weather in your part of the country will be nice this weekend and you can get out and take a walk and enjoy the local seasonal decorations.

WEEKLY TAKE AWAY

I’m thinking “look back to move ahead” makes so much sense for this week as we start the countdown to 12 PM December 31st.  Each week as I start my blog I look back at my blog from the same time period the prior year and I’m glad so say I am usually happy with what I’ve written (even with the type-o’s – I’m good with numbers, spelling, not so much).  This week I checked and saw that we are in the same mindset in our office.   We’re setting up our next 90 day action plan, working on scheduling mini tax minimization plans with our clients, updating time lines, deadlines and starting to finalize our year end reviews.  This year we added focusing on clearing our desks so we can enjoy our family holiday time with NO WORK STRESS or PRESSURE.   Now it’s my time to bundle up in my favorite windproof fleece and get out there…

TAX ISSUES/TAX PLANNING

Bunching Medical Expense When Possible

I usually like to pull tax tips and minimization strategies from the questions we receive during the week.  As the end of the year draws near and many of us have already met our insurance deductible and we wonder if any of our out-of-pocket expenditures will be deductible on our tax return.  The rules at the federal level are a bit complex and multi-tiered.  In order to itemize medical expenses for yourself, your spouse, and your dependents allowable medical expenses must exceed 7.5% of your adjusted gross income (AGI).  In addition, when these eligible deductions exceed 7.5% of your AGI they get added to other itemized deductions (State and Local Taxes – SALT, Charitable Contributions, Mortgage Interest, etc.) in order to take those out-of-pocket medical expenses as a deduction on your tax return your itemized deductions must exceed the standard deduction for your filing status, AND these expenses must be “allowable” for this category of deductions.

Our advice where possible is to stay healthy with diet 🍎🧋🥗 and exercise 🏋🏿‍♀️🏋🏿‍♂️🏋🏿🏃🏿‍♀️🏃🏿‍♂️🏃🏿, but when your medical and dental expenses are expected to be high you can choose to “bunch” certain non-time sensitive expenses like expensive dental work 🦷🪥 or annual screenings 🩻during one year, rather than spreading them over a longer period.

Meet Sarah, the health-conscious CPA on a mission to maintain her radiant smile 😁. Recently faced with the need for expensive dental implants, she decides to turn this into a tax-savvy adventure.  Sarah knows the tax code , so she decides to ‘bunch’ her medical expenses by paying in full for her dental implant procedure upfront and scheduling her annual health screenings during the same tax year.  She now has a lively cocktail party 🍸🍹🍷🥂tax anecdote and will be able to flash her perfect smile as she relates her “Great Smile Tax Advantaged Adventure.” I just hope she remembers to use a nutcracker rather than her new teeth to shell the walnuts she craves.

With dental implants 😬 secured and annual screenings accomplished, Sarah not only achieves a healthier smile but also maximizes her tax deductions. Her approach serves as a reminder that strategic planning can turn unexpected expenses into opportunities for financial wellness.

Deductible medical expenses may include but aren’t limited to amounts paid for the following:

• Fees to doctors, dentists, surgeons, chiropractors, psychiatrists, psychologists, and nontraditional medical practitioners.
• Inpatient hospital care or residential nursing home care, if the availability of medical care is the principal reason for being in the nursing home, including the cost of meals and lodging charged by the hospital or nursing home. If the availability of medical care isn’t the principal reason for residence in the nursing home, the deduction is limited to that part of the cost that’s for medical care.
• Acupuncture treatments.
• Inpatient treatment at a center for alcohol or drug addiction; amounts paid for participation in a smoking-cessation program and for prescription drugs to alleviate nicotine withdrawal.
• Weight-loss program for a specific disease or diseases, including obesity, diagnosed by a physician.
• In limited situations, amount paid for membership to a health club primarily for the purpose of preventing or alleviating obesity.
• Insulin and prescription medicines or drugs.
• Admission and transportation to a medical conference relating to a chronic illness of you, your spouse, or your dependent (if the costs are primarily for and essential to necessary medical care). However, you may not deduct the costs for meals and lodging while attending the medical conference.
• False teeth, reading or prescription eyeglasses, contact lenses, hearing aids, a guide dog or other service animal to assist a visually impaired or hearing disabled person, or a person with other physical disabilities, crutches, and wheelchairs.
• Transportation primarily for and essential to medical care that qualify for the medical expense deduction. Amounts paid for transportation include your out-of-pocket expenses for your personal car such as gas and oil, or the standard mileage rate for medical expenses, plus the cost of tolls and parking; taxi, bus, or train fare; and ambulance costs.
• Insurance premiums to cover medical care or qualified long-term care.
• Certain costs related to nutrition, wellness, and general health are considered medical expenses. More information about qualifications can be found in the Frequently asked questions about medical expenses related to nutrition, wellness, and general health.

Please see IRS Publication 502 for a full listing

Grateful and Looking to Share with a Possible Tax Benefit 🎁🪆🧸🚲

During this holiday season, remember those less fortunate and consider beefing up your charitable donations.  With state decoupling from IRS rules  you may be able to itemize deductions at the state level even if your situation does not enable you to itemize deductions at the federal level.  Consider non-monetary donations by participating in food, toy and clothing drives.  Remember the rules about donations and documentation.  I wrote about charity fraud in a prior post, so beware and be aware.

ECONOMY

Americans are Expected to Increase Spending this Holiday Season 🎄❄️🎅🏿🕎

According to one survey, American shoppers are expected to spend 14% more this holiday season than they did in 2022, this despite inflation and high interest rates. Roxana Saberi has more.

The Looming Office Space Real Estate Shortage

There is more pain to come in the office real estate market across the U.S., with maturing debt needing to be refinanced and a wave of expiring leases, but there is also what may seem at first brush to be a counter-intuitive message being sent to top tier companies by real estate intelligence company CoStar Group: prepare for an office space shortage.

US Economy Doing Better than National Mood Suggests

“Americans have been in a grumpy mood of late. Pessimism stood at “overwhelmingly high” levels, Gallup reported in mid-October, echoing similar grim readings from the University of Michigan and other pollsters. But perceptions aren’t entirely matching reality, at least when it comes to financial, economic and money issues.  As 2022 ended, interest rates were rising, inflation was running at a 6.5% annualized pace and the stock market had just suffered a 19% drubbing. Since then, interest rates have largely stabilized, inflation has dropped noticeably and stocks are rallying again. ”

The 20 Worst States to be a Property Owner

People complain the most about income taxes, but property taxes aren’t much fun, either, and worth paying attention to when you’re thinking about relocating. This list ranks the states with the highest effective real-estate tax rates, with the worst five states having an average rate of 2.17%.  The average amount of annual taxes on a $244,900 home (the median value of a house in the U.S.) in these states is $5,310.

Houston, Dallas, Miami, and Nashville are Poised to Become Economic Powerhouses in the US.

The future of the US economy could be powered by cities in the Sunbelt. Economic and societal power in the US may be shifting away from colossal coastal cities such as New York and San Francisco to metropolitan areas tucked below the Mason-Dixon line, as Barron’s recently reported.  Just as New York City has Wall Street and San Francisco has Silicon Valley, Houston has its energy economy and Miami has its proximity to Latin America and growing financial industry. And while Los Angeles has Hollywood and Washington, DC, has politics, Dallas has a blossoming environment of diversified business behemoths and Nashville is a healthcare and tech hub.

The Federal Reserve Broke The Budget. Buckle Up For What Comes Next.

?The Federal Reserve’s years of enabling big budget deficits by keeping interest rates ultralow are over. But the long-term costs are just becoming clear.  The 10-year Treasury yield set off roaring alarms about the U.S. budget when it surged to 5% last month. Now those warnings look like a fire drill. Federal Reserve rate hikes seem to be over for now, giving the bond market a reprieve and allowing a powerful S&P 500 rally to resume.”

Is the US Economy is on its Final Descent to a Soft Landing?

“After defying recession fears this year, the US economy is forecast by Goldman Sachs Research to easily beat consensus expectations again in 2024.  US GDP is projected to expand 2.1% in 2024 on a full-year basis, compared with 1% for the consensus of economist forecasts surveyed by Bloomberg. Goldman Sachs Research reaffirms its longstanding view that the probability of a US recession is much lower than commonly appreciated — at just 15% over the next 12 months.”

America’s Runaway Debt Scenario: $1 Trillion in Interest per Year

America’s debt spiral could devolve into a fiscal crisis or hyperinflation, several economists say. The U.S. federal government has borrowed so much money that, over the past year, it has had to spend one-fifth of all the money it collected just on debt interest—which came to almost $880 billion.

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
  • Portal to update information
  • A list of frequently asked questions on the advance Child Tax Credit Payments
• 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 tax concerns, tax minimization questions or want to discuss the next steps for your business success and financial goals.