4th Quarter Estimated Tax Payments Due 1/16/24

Fourth quarter estimated taxes are due 1/16/24. If we set up for you to pay quarterly estimates, you should have recently received your personalized estimate reminder in the mail.

For anyone paying estimated taxes, we now recommend that you make those payments online. Doing so is much safer than sending the IRS a check, and you receive an instant confirmation that the payment has been processed. Sadly, the IRS hasn’t done a great job processing their mail since COVID.

Plus, there is a new scam where people steal checks from a mailbox, “wash” the check with specific chemicals to allow them to change just the payee and the amount while keeping the signature intact, and then deposit that fraudulent check into their own bank account to steal the funds. Learn more about check washing at: https://www.experian.com/blogs/ask-experian/what-is-check-washing/.

To make the payment online if you haven’t yet set up an account with the IRS, simply:

1. Go to www.irs.gov

2. Click on Make a Payment (https://www.irs.gov/payments)

3. Click on Pay Now with Direct Debit (https://www.irs.gov/payments/direct-pay)

4. Click on Make a Payment (https://directpay.irs.gov/directpay/payment?execution=e1s1)

5. Select the following:

  • a. Reason for Payment: Estimated Tax
  • b. Apply Payment To: 1040ES
  • c. Tax Period for Payment: 2023 (Make sure this doesn’t say 2024)

Answer the rest of the questions and you should be all set to make the payment. Massachusetts and most other states allow you to pay any state estimates due using their Tax Department website.

If you are a practice owner and run your practice as an S-Corp or Partnership, you can pay the Mass taxes due on the profit as a deductible expense to the practice known as the Entity Level Tax (ELT). More information about the ELT can be found at: https://schwartzaccountants.com/2022/05/elt-entity-level-tax-update/. The fourth quarter ELT payment is also due on 1/15. Please look carefully at the instructions sent as part of your practice’s 2022 tax return to see if an ELT payment has been set up for direct debit out of your business bank account.

RE: 2024 – Ten Prudent Personal Finance Steps To Take

Personal financial planning is an ongoing process. Financially speaking, 2023 was another challenging year for many of us. The stock market was quite volatile this year, but ended the year near all-time highs, which is great for people who remained invested.  Real estate prices around the country are teetering at their recent highs. And interest rates remained high for much of the year.

Hello 2024. No one knows how financially friendly this year will be. For that reason, here are ten prudent steps you can take to keep your personal finances moving on the right track:

  • REset your retirement savings:Most people find it easier to max out their retirement contributions by budgeting a set amount each month. Instruct your employer to withhold $1,916.67 per month for your 401(k) or 403(b) plan to ensure that you hit the “salary deferral” max of $23,000 for 2024. Are you self-employed? If so, you can put away up to $69,000 this year into a SEP, Keogh or Solo 401(k), which equals $5,750 per month. And if you’ll be 50 or older by December 31st, the maximum 2024 contribution jumps to $30,500 for 401(k) and 403(b) salary deferrals and $76,500 for Solo 401(k)’s. Please also reset your salary to $345k which is the maximum salary for retirement plan contributions for 2024 if you’ll be maxing out the profit-sharing plan at your practice.
  • REjoice if you have a low home mortgage rate: Mortgage interest rates remain near multi-year highs during 2023. For people who purchased a new home or refinanced an existing mortgage with extremely low rates available prior to 2022, please remember that while inflation helps your salary grow, the monthly payment for your fixed-rate mortgage remains constant over the term of the loan, making it easier to make your mortgage payments each month.
  • REduce your personal debt: There is still relatively easy access to plenty of debt for most people. Remember, leverage equals risk. Make 2024 a year to pay down some of your personal debt. Perhaps you might also delay the purchase of a new car, scale down your awesome vacation, or settle for an 80-inch flat screen TV.
  • REvise your savings and debt reduction goals: Take a few minutes to set (and also write down) new savings goals including how much you’d like to put away towards your retirement, a child’s education, and/or the down payment on a home, and also to reset how much you plan to pay down your student loans, personal debt, and home mortgage by the end of the year. (Please watch Alex Oliver’s recorded webinar on Game of Loans: Income Based Repayment Versus Refinancing.) or read Rick Schwartz’s article on the new Saving on a Valuable Education (SAVE) Plan.)
  • REbalance your investment portfolio:Warren Buffet said it best by stating, “A simple rule dictates my buying: Be fearful when others are greedy and be greedy when others are fearful.” During 2023, the stock market provided us with quite a roller coaster ride. By rebalancing your portfolio to its original or updated asset allocation, move money into sectors that underperformed and soon enough might be poised to catch up.
  • REdiscover fixed income investments:Earn a guaranteed and risk-free 5.27% interest rate through April 2024 while also making your portfolio a little more conservative by purchasing I-Bonds, a special type of inflation protected treasury bond issued by the US government.
  • REvisit your life and disability insurance needs: Life and disability insurance needs change with the stages of your life and career. Give some thought to how much of these insurances you need going forward versus how much you currently get through your employer’s benefit package and any personal policies you’ve purchased.
  • REview your overall health insurance costs: Consider switching to a qualified high deductible health insurance plan that allows you to contribute to a Health Savings Account (HSA). HSAs provide for tax-deductible contributions AND tax-free withdrawals. The maximum contribution for 2024 increases to $4,150 for individuals and $8,300 for people with family plans. Anyone 55 or older can add an additional $1k. Many people with HSAs choose to let the money contributed into their account grow tax-deferred, and instead pay for their family’s healthcare costs out of their household checking account. (Please watch Alex Oliver’s 2/21/20 webinar on Health Savings Accounts.)
  • REsolve errors on your credit report:Each year, you’re entitled to three free credit reports, so it’s worthwhile to look at this important financial report annually, especially since errors are not uncommon. Order your free report at annualcreditreport.com.

Invest some time now and plan ahead to make 2024 a great year financially for you.

Businesses Set Up After 1/1/24 Only Have 90 Days To Comply With New CTA Rules

In 2024, a stringent new filing requirement takes effect under the Corporate Transparency Act. The act compels all qualifying small businesses to disclose certain identifying information on “beneficial owners” to the Financial Crimes Enforcement Network (FinCEN).

Penalties for noncompliance are extremely steep, so we are strongly urging all our clients to make CTA compliance a priority. Please read through the compliance guide on your own, or plan to work with an attorney to gather the required information, complete the BOI report, and then submit to FinCEN prior to the January 1, 2025 deadline. Due to the legal complexity involved, we are not currently able to provide this service, but please feel free to contact your Client Manager with questions.

While existing businesses set up prior to 1/1/24 don’t need to file under the new CTA rules until 1/1/25, new businesses established after 12/31/23 have a much shorter window to comply.  The revised rules give new businesses set up in 2024 only 90 days to file. Starting in 2025, new businesses only have 30 days to file. For that reason, please ensure that the lawyer who is setting up your new business will take care of this time-sensitive filing as part of the services they are providing.

CTA BASICS:

Effective January 1, 2024, the Corporate Transparency Act (CTA) establishes a new filing requirement for small business. Qualifying businesses must file a Beneficial Owner Information (BOI) report with Financial Crimes Enforcement network (FinCEN), a bureau under the Department of Treasury. According to the bureau’s website, the expectation is that nearly all small businesses will meet the criteria and must file (Beneficial Ownership Information Reporting FAQS).

Information on the reporting company itself that must be disclosed in the BOI report filing:

  • Full name of the reporting company
  • Any trade name or ‘doing business as’ name of the reporting company
  • Business street address of the reporting company
  • State or Tribal jurisdiction of formation of the reporting company
  • IRS TIN of the reporting company

And for each beneficial owner identified, the reporting company must provide:

  • Full legal name, date of birth, current residential or business street address
  • Unique identifying number from an acceptable identification document
  • Image of the identifying document (Federal Register :: Beneficial Ownership Information Reporting Requirements)

Entities registered before January 1, 2024 have one year to file initial reports. Entities registered during 2024 will have 90 days from notice of registration to file. Penalties for reporting violations are severe, $500 per day reaching up to $10,000 in fines and up to 2 years imprisonment for criminal violations.

IRS Announces Higher Standard Mileage Rates for 2024

From IRS News IR-2023-239, Dec. 14, 2023

The Internal Revenue Service issued the 2024 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2024, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 67 cents per mile driven for business use, up 1.5 cents from 2023.
  • 21 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, a decrease of 1 cent from 2023.
  • 14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2023.

These rates apply to electric and hybrid-electric automobiles as well as gasoline and diesel-powered vehicles.

The standard mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

It is important to note that under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Taxpayers also cannot claim a deduction for moving expenses, unless they are members of the Armed Forces on active duty moving under orders to a permanent change of station. For more details see Moving expenses for members of the armed forces.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

Taxpayers can use the standard mileage rate but generally must opt to use it in the first year the car is available for business use. Then, in later years, they can choose either the standard mileage rate or actual expenses. Leased vehicles must use the standard mileage rate method for the entire lease period (including renewals) if the standard mileage rate is chosen.