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It’s been crazy busy here as we head into the heat of tax season, and, if I have learned anything from prior tax seasons it’s “Take Care of You First” and it will all work out in the end, or if not, starting the day right should set the stage for your mood and your interactions. This week I made a new friend as I started my day with a 1 mile “round trip jetty” walk 🚶🏻‍♀️ before heading back home for a more intense workout. Bob a cute rescue was walking with his mom at sunrise 🌅. She was tossing a ball with one of those ball throwing sticks, but he kept bringing his ball back to me (I can barely throw 20 feet). I guess I was a novelty as he greeted me several days this week with his colorful ball. He was so cute and certainly boosted my mood. If I run into them next week I’ll ask him to pose. I did catch a few really pretty sunrises though…

On Wednesday afternoon I started working remotely from New Jersey with Monica in her home office. On Thursday we were a completely remote office (I took this photo during our morning huddle): Monica and I were in NJ, Ramona was in Queens, Raquel in Brooklyn, Elizabeth in Georga and Myriam in Florida🗽🍑 🍊…

Our other NJ office mate, Asta (named for the dog in The Thin Man) gets up early too…

We are expecting mixed weather this weekend:  a mix of rain and cloudy days, but I am hoping you have great plans anyway. ⛈️🌦️⛅☁️

WEEKLY TAKE AWAY

In our office we say ” any day that we learn something new is a great day”.  This week was jam packed with lesions learned, but this one which came from one of our business clients during our year-end review meeting and probably pertains to everyone who still uses checks and the U.S. Postal service (basically most of us young-ins over 40 years old).  As a successful business owner Josephine R. pays invoices via various methods including vender checks mailed through the local post office.  Hearing about the recent rash of stolen checks being washed and reissued she was determined to fight back.  Josephine fills out all checks with an ultra- fine point sharpie permanent marker and also includes a message across the face of the envelope “we use Sharpie Ultra- Fine Point Permanent Marker on all checks”.  She is betting that the potential thieves will leave her mail alone and move on to other less protected envelopes.  🖊️📩

TAX ISSUES/TAX PLANNING

IRS to Boost Enforcement Workforce by 40% by Year-End 2024

The Internal Revenue Service (IRS) intends to increase its enforcement personnel by 40% by the end of this fiscal year, with revenue agents seeing the largest workforce increase to 70% of the enforcement personnel.  Despite the change in personnel, the IRS anticipates significant improvements in collections will come from better data analytics and improved IT systems.  What’s a taxpayer to do?  Be proactive: consider tax minimization planning, work closely with knowledgeable tax professionals who can interpret the law and guide business owners and individuals on tax benefits eligibility AND Document, Document, Document!

IRS Tax Inflation Adjustments for 2024

The tax year 2024 adjustments described below generally apply to tax returns filed in 2025:

The tax year 2024 adjustments described below generally apply to income tax returns filed in 2025.

• The standard deduction for married couples filing jointly for tax year 2024 rises to $29,200, an increase of $1,500 from tax year 2023. For single taxpayers and married individuals filing separately, the standard deduction rises to $14,600 for 2024, an increase of $750 from 2023; and for heads of households, the standard deduction will be $21,900 for tax year 2024, an increase of $1,100 from the amount for tax year 2023.
•  Marginal rates: For tax year 2024, the top tax rate remains 37% for individual single taxpayers with incomes greater than $609,350 ($731,200 for married couples filing jointly).

The other rates are:

• 35% for incomes over $243,725 ($487,450 for married couples filing jointly)
  32% for incomes over $191,950 ($383,900 for married couples filing jointly)
  24% for incomes over $100,525 ($201,050 for married couples filing jointly)
  22% for incomes over $47,150 ($94,300 for married couples filing jointly)
  12% for incomes over $11,600 ($23,200 for married couples filing jointly)
• The lowest rate is 10% for incomes of single individuals with incomes of $11,600 or less ($23,200 for married couples filing jointly).

Five New Retirement Numbers to be Aware of in 2024

The new year has brought some new math for anyone running their retirement planning numbers.

• The Social Security Cost of living adjustment (COLA) is 3.2% (much lower than the 8.7% increase for 2023
• Medicare premiums increase: this year the Part B premium increase by 5.9%, to $174.70.
• Medicare Part D prescription drug coverage will have a $2,000 annual cap on out-of-pocket costs for drugs
• The starting age for RMDs was raised in 2020 to 72 from 70, it was raised again last year, to 73. The minimum age will continue to rise, gradually, to 75 by 2033.
• The Full Retirement Age (FRA), has increased yet again (now 67 years old for those born during or after 1960); if you delay taking your benefits until age 70, your monthly benefit amount will increase by 30%

ECONOMY

Federal Reserve Chair Jerome Powell Sees Lower Rates on the Horizon as Inflation Ebbs

On Wednesday, Federal Reserve Chair Jerome Powell, in a sweeping endorsement of the U.S. economy’s strength, said that interest rates had peaked and would move lower in coming months, with inflation continuing to fall and an expectation of sustained job and economic growth.

• Fed keeps policy rate in 5.25%-5.50% range
• U.S. central bank says inflation still elevated
• Fed’s Powell says March rate cut unlikely

The 20 Higest Ranked States for Ease of Saving

If you are thinking about putting away some money, where you live can make quite a difference, as some states are more conducive to saving than others due to  debt and income, cost of living, housing and taxes; the purchasing power of your finances =savings power of your finances.

U.S. Economy Added 353,000 Jobs in January; Much Better than Expected

Job growth posted a surprise increase in January, demonstrating again that the U.S. labor market is solid and poised to support broader economic growth.  Wage growth also showed strength, as average hourly earnings increased 0.6%, double the monthly estimate. On a year-over-year basis, wages jumped 4.5%, well above the 4.1% forecast.

Federal Reserve Issues Federal Open Market Committee (FOMC) Statement

The Federal Open Market Committee (FOMC) is the division of the Federal Reserve that sets monetary policy by managing open market operations. By doing this, the Fed influences the fed funds rate, which impacts other interest rates.  Recent indicators suggest that economic activity has been expanding at a solid pace. Job gains have moderated since early last year but remain strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated.

Per the FOMC press release of January 31st:  “The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee judges that the risks to achieving its employment and inflation goals are moving into better balance. The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks.

In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective.

Inflation-Focused Federal Reserve Shoots Down Wall Street’s Hopes of March Cut

A recent Reuters article reports:    “Stocks and bonds soared at the end of last year on expectations the Fed had reached a peak in its rate-hiking campaign and would soon begin cutting rates. Easier monetary policy is generally seen as a tailwind to equities as it lowers the cost of money for companies and households while guiding bond yields lower.

Some investors believe those rallies may have run too far. Central bank officials in recent weeks have pushed back against the notion of imminent rate cuts, while continuing resilience in the economy stirred worries that inflation could rebound if the Fed lowered borrowing costs too quickly.”

Investors hoping for imminent rate cuts by the Federal Reserve received a sobering reminder of the U.S. central bank’s focus on fighting inflation, after Chairman Jerome Powell poured cold water on bets policymakers would lower borrowing costs in March.

House Passes Sweeping, Bipartisan Bill with Expanded Child Tax Credit and Business Tax Breaks, But…

Last Wednesdy The House passed a sweeping, bipartisan tax bill that would expand the child tax credit for American families and reinstate some tax cuts for businesses, however, it still has to be approved by the Senate and then signed into law by the president.  We have been warned that it may make sense to extend 2023 tax returns which could be effected, rather than ammend those tax returns.  Sound familiar?

Layoffs Hit 10-Month High as Financial and Tech Companies Slash 39,000 Jobs

January was one of the largest months for layoffs in almost 15 years, a new report by Challenger, Gray & Christmas said Thursday, as more than 82,000 people, largely in the technology and financial services sectors, were let go from their jobs.

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