Here’s your tax and financial checklist for 2024 – Daily News

Judging by the weather, 2024 is coming in like a lion. And, given that it’s an election year, it’s likely to keep roaring.

The Tax Cuts and Jobs Act of 2017 is set to expire Dec. 31, 2025, and along with it, many tax benefits and some tax detriments will evaporate. That is unless Congress can get its act together and extend the law or come up with a new one. Whether that will happen will depend a great deal on the November elections.

And California has a few new laws as well.

What should you be doing to stay calm and get your own house in order?

Review documents

The tax tail doesn’t have to wag the dog. For many Americans, there are more important issues than estate taxes.  Let’s start with the basics.

A new year tends to bring with it a commitment to get financial affairs in order. That should always include looking at your estate plan or getting one in place if you don’t already have one.

Are the parties you named to serve as the trustee or those you named as beneficiaries still the persons you would choose?

Have there been deaths, births, or marriages in your family that require changes to your trust? Has the size of your estate changed?

All of these are reasons to take another look at and update your estate plan. A good rule of thumb is to review your plan every 3 to 5 years. Or, if it’s easier to remember, review your plan every year there is a Presidential election. Like in 2024.

Estate and gift taxes

As a result of the laws sunsetting after 2025, a review may be even more important now.

For 2024, the estate and gift tax exemption is $13,610,000 per person. That means any one person can give during their lifetime or at their death a total of $13,610,000 without incurring gift or estate taxes. In 2025 that number will go up (it’s adjusted for inflation).

But when/if TCJA expires in 2026, that number will drop dramatically to somewhere around half as much ($6 to 7 million, depending again on the inflation adjustment).

What that means for high-net-worth individuals is that you’re running out of time to make tax-free gifts using the higher exemption.

Many techniques for estate tax planning take more than a year to implement properly. Thus, if you have an estate with a value over $7 million (or $14 million for a married couple), you should see your adviser now to consider strategies for current gifts to use the higher exemption amount.

Of course, there is always the possibility that Congress lowers the exemption amount even more — which makes advance tax planning that much more important.

Annual gift tax exemption

The annual gift tax exemption (i.e., the amount one can gift without using any of the lifetime exemption discussed above) is $18,000 per recipient for 2024.

For a married couple, that’s $36,000 per recipient. That’s a number that can be leveraged with gifts in trust for children, grandchildren and others over the years.

For example, a married couple with three children and six grandchildren could gift $324,000 ($36,000 x 9 recipients) into a trust for the benefit of their descendants, without utilizing any of the lifetime estate and gift tax exemption they each have.

The $324,000 gifted into an irrevocable trust will appreciate outside the parents’ estates, thus reducing potential estate taxes — particularly valuable when the estate tax exemption drops.

Corporate Transparency Act

As mentioned in previous columns, 2024 is also the year small and medium-sized businesses (limited liability companies, corporations and limited partnerships) need to comply with the Corporate Transparency Act.

This means reporting the names, residential addresses and providing photo IDs of the “beneficial owners” of the business to the Financial Crimes Enforcement Network of the Department of Treasury.

You have until Dec. 31 this year to file if the law applies to your business, so be sure to check with advisers. There are stiff fines and possible jail time if you don’t file on time.

California’s new laws

California has myriad laws effective Jan. 1, 2024. Those include laws that:

—Increase guaranteed paid sick leave from three days a year to five. (Senate Bill 616)

—Ban employers from firing or penalizing workers based on hair or urine test results for marijuana. (Assembly Bill 2188)

—Bar employers from asking job applicants about prior cannabis use (workers in the construction industry and positions that require federal background checks are not included). (SB 700)

—Streamline the process for undocumented college students to apply for state financial aid. (AB 1540)

—Bans Californians from carrying firearms in various public places such as parks, stadiums, and places of worship. (SB 2)

—Require private health insurance plans to cover birth control products, including condoms and spermicide, without a prescription and no co-pays. This portion of the law applies only to women and is allowed only in in-network pharmacies. Men will have the option of cheaper vasectomies. (The Contraceptive Equity Act of 2022)

Laws are constantly changing. It’s important to have advisors in place, keep reading the news and act swiftly to plan.

With 2024 being an election year, and many tax and other laws set to expire after 2025, it’s more important than ever to stay informed.

Teresa J. Rhyne is an attorney practicing in estate planning and trust administration in Riverside and Paso Robles, CA. She is also the #1 New York Times bestselling author of “The Dog Lived (and So Will I)” and “Poppy in The Wild.”  Reach her via email at [email protected]


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