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Plan for 2024 Income Taxes as the New Year Gets Underway

February 22, 2024 • | Curran Estate & Elder Law, PLLC
As you plan for the year ahead, you may be thinking about how the IRS’ changes to income tax brackets and standard deductions—which include a 5.4% bump in bracket thresholds—could impact the 2024 income tax planning season.

You may have many questions about the IRS’ adjustments. Now is the time to consider what moves to make in 2024 for the tax year ahead, according to a recent article from l Advisor, “Best Practices: 2024 Income Tax Planning.” Deferring income could provide tax savings, or bunching itemized deductions in 2024 to take a standard deduction the next year could help save money over the long run.

The current inflation-adjusted lifetime exemption—the amount the IRS permits an individual to give away throughout their lifetime without needing to pay federal gift tax—is, for now, still very high, at $13.61 million. Now is the time to speak with your estate planning attorney about options for philanthropy and grants, whether gifting to a charity, making direct contributions to an IRA, or supporting a 529 college savings plan.

A discussion should also take place with your accountant to discuss tax loss harvesting and liquidating assets depending on personal needs and market performance. Positioning your portfolio to maximize the benefit of a lower tax rate on long-term capital gains investments and qualified dividends should also be considered.

As we move through a presidential election year, tax chatter is likely to pick up. The sun-setting of federal estate tax exemption laws and the IRS’ increased scrutiny on high net worth individuals may impact estate planning and exemptions.

The IRS is funding thousands of new agents and adopting new technology, including AI and analytics, to improve oversight with a focus on pass-through entities including limited liability companies, general partnerships, limited partnerships, and S-Corporations, among others.

With the federal estate tax exemption anticipated to end at the close of 2025, now is the time to prepare. Maintaining the current exemptions for another 10 years would cost the government $3.3 trillion, so it is likely to sunset at the scheduled time. The rules cover higher standardized deductions, reduced estate tax, lower tax rates at all levels, qualified business income and a $10,000 limit on state and local tax deductions.

Reference: Financial Advisor (Jan. 25, 2024) “Best Practices: 2024 Income Tax Planning”

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