The year-end newsletter full of tax advice is available upon
request. Please call the office at (201)797-4761 for your complimentary copy!
1. In regard to retirement plans, the maximum contribution limits
for 2024 are outlined below:
Traditional & Roth IRA's for Taxpayers under 50 | $
7,000 |
Traditional & Roth IRA's for Taxpayers over 50 | $ 8,000 | 401K's
for Taxpayers under 50 | $23,000 | 401K's
for Taxpayers over 50 | $30,500 | SEP
& Defined Contribution Plans for Taxpayers under 50 | $69,000 | SEP
& Defined Contribution Plans for Taxpayers over 50 | $69,000 |
2. For 2024 the IRS allows a deduction for your automobile at various rates depending on the
usage. The details are outlined below: Car
used for business | 67 cents per mile |
Car used for charitable purposes | 14 cents per mile |
Car used for medical or moving purposes | 21 cents per mile |
3. Child care tax credits for summer day camp and babysitters are still available for children under 13 years
of age if both parents work. 4. In regard to the "kiddie" tax the law increases the age
from 14 to 18 regarding investment income. If the child is under 25 and still in college and they have investment
income of over $2,600 they will be taxed at their parents' rate instead of the individual rate. 5. The
minimum corporate tax in New Jersey is based on gross receipts and ranges from $500 to $2,000 for 2024. 6.
The New Jersey Homestead rebates for a homeowner has been replaced by The Anchor Program and now range from $1,000 to $1,500
for 2024. 7. The threshold for the deduction of unreimbursed medical expenses has
been changed to 7.5% of your adjusted gross income. 8. The tax rate on dividend income
is generally 15% for 2024. However, if in the top tax bracket then the rate is 20%. 9. The maximum tax rate on capital gains is
15% for 2024 if your taxable income is under $583,751 on a joint return. If over $583,751, the capital gain rate rises
to 20%. 10. A Medicare surtax of 0.9% will be assessed on W-2 employee compensation or self-employment
income if you earn over $250,000 on a joint return. 11. There is a 3.8% Medicare
surtax on net investment income. 12. For flexible spending accounts (FSA) over the counter medications are no longer eligible. In 2024,
the maximum annual FSA contribution for each employee will be capped at $3,200. 13. Under the American
Opportunity Tax Credit there is a $2,500 maximum credit for qualified higher education expenses such as college. However the
credit phases out for married couples earning over $160,000. 14. In 2024, there are no estate taxes at
the federal level unless your estate is over $13.61 million. In New York the estate must be over $6,940,000 in
order to be taxed. The annual gift tax exclusion is $18,000 per donee in 2024.
The estate tax has been eliminated in New Jersey. However, the New Jersey Inheritance tax will remain
in effect with no change during the same time period. This is a tax assessed on transfers to beneficiaries other than
spouses, parents, or children. Therefore, it would be imposed on nieces, nephews, siblings and friends. The New
Jersey Inheritance tax rates range from 11% to 16% based on taxable income. 15. There is no
limit on itemized deductions in 2024. 16. The Social Security wage base has increased to $168,600 for 2024. If you start collecting
Social Security at age 62, you will be subject to a 25% discount. If you are between the age of 62-66, you can
earn up to $21,240 before losing any benefits. There is no income restriction of social security benefits after age
66. 17. In 2024, contributions to HSA Plans is now $4,150 for individuals and $8,300 for family coverage.
If over 55, you can deduct an additional $1,000. 18. There will be an increase in the New Jersey
Gross Income Tax exclusion for pension and retirement income to $150,000 on a joint return. 19.
The New Jersey sales tax is 6.625% for 2024. Tax
Cuts & Jobs Act - 2017 (Updated 2024) The tax law called "Tax Cuts & Jobs Act"
was passed by Congress at the end of 2017. This law creates numerous tax saving opportunities for individuals and businesses.
Some of the new laws are simple and others are very complex. I have outlined below the highlights of this recently passed
tax legislation.
Individuals 1. The new law
provides for the same number of tax brackets but with lower rates. The highest tax rate has been reduced from 39.6% to 37%.
2. The personal and dependent exemptions which were $4,050 each have been eliminated.
3. The child tax credit for those under 17 has been reduced to $2,000 per child. The income level at which the credit begins
to phase out also increases allowing more taxpayers to benefit.
4. The standard deduction has increased
to $14,600 for single filers and $29,200 for married couples. If over 65, there is an additional $1,500 per person.
5. The deduction for state and local income taxes and property tax has been limited to $10,000. This will
probably cause real estate to decrease in value.
6. The mortgage interest deduction has been limited
to those loan balances up to $750,000 for debt incurred after 12/15/17 which is used to buy, build, or improve your primary
or secondary home.
7. The interest deduction on home equity loans has been changed. Interest paid
on these loans for money used to buy, build, or improve a taxpayer's home is still deductible. However, if the money
from these loans is used for personal reasons such as paying off credit card debts or buying a car, it is not deductible.
If you convert these loans to a first mortgage then if becomes 100% deductible.
8. The threshold
for deducting medical expenses has been decreased from 10% to 7.5% of your adjusted gross income for 2024.
9. The following miscellaneous deductions are no longer
deductible in 2024:
a. Unreimbursed business expenses
b. Fees for investment advice c. Union dues
d. Legal fees related to divorce or producing income e. Safe deposit
box fees f. Tax Preparation fees g. Uniforms 10. Alimony payments will no longer be deductible by the payer and taxable income to the recipient for
any divorce agreements that were entered into after 12/31/18.
11. The moving expense deduction
has been eliminated for everybody except military personnel.
12. The investment income of a child
known as the "Kiddie Rate" will be taxed at trust income tax rates which are higher than the old income tax rates.
13. In 2024 the 529 Plans can now be used for private or religious school tuition grades K-12, in addition
to college.
14. The new law increases the estate tax exclusion to $13.61 million for individuals. Therefore,
fewer estates will be subject to taxation. 15. The gift tax exclusion is $18,000 per year per donee
in 2024.
16. The Alternative Minimum Tax (AMT) has not been repealed but they have increased the
exemptions which mean less people will be subject to it in 2024.
17. The individual mandate to purchase
health insurance under Obamacare has been repealed for 2024.
Businesses
1. The maximum tax rate for corporations
has been reduced from 35% to 21%. 2. There
is a new deduction called QBI of 20% for pass through entities such as S-Corps, Partnerships and Sole Proprietors. Certain
types of service businesses such as doctors, accountants, and lawyers are excluded from this deduction if the income for single
filers is over $232,100 and $464,200 for married filing jointly. The deduction is also limited to the higher of 50% of W-2
wages paid or 25% of wages paid plus 2.5% of unadjusted basis of depreciable assets.
3. The deduction for entertainment expenses has been eliminated. However, the deduction for meal expenses
has been reduced to the rate of 50% and has been expanded to include meals provided on the premises of the employer.
4. The deduction for the purchase of equipment known as section 179,
has been increased to $1,220,000 in order to accelerate your write off in the first year.
5. There will be a reduced rate for repatriation of foreign source income being returned to the US.
The rate is 15.5% for liquid assets + 8% for illiquid assets.
Please adjust your W-4 form or your estimated taxes based upon the information above. If you have any questions, please don't hesitate to call me.
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