Trump’s 2024 Tax Plan: Key Highlights Explained

Posted on by William A Olson, CPA

Donald Trump’s 2024 tax plan includes several key proposals aimed at reducing tax burdens for individuals and businesses while encouraging domestic production. The main highlights are:

  1. Extension of the 2017 Tax Cuts and Jobs Act (TCJA): Trump proposes making the individual and estate tax cuts from the TCJA permanent. This includes maintaining the lower tax rates, higher standard deduction, and the reduced estate tax thresholds, which are set to expire after 2025 under current law​.
  2. Reduction in Corporate Tax Rates: He suggests lowering the corporate tax rate from the current 21% to 20% and potentially as low as 15% for companies manufacturing in the U.S. This aims to incentivize domestic production and job creation​.
  3. Elimination of Specific Taxes: Trump has proposed removing taxes on Social Security benefits, which currently apply to a portion of benefits for some retirees. Additionally, he has floated the idea of making tipped income and overtime pay tax-exempt, which could benefit service industry workers and low-income earners​.

As with all proposals, these changes are not guaranteed. Because of slim Republican margins in the House and Senate, I expect modifications to these proposals as they move through Congress.

Mid Year Tax Planning

Posted on by William A Olson, CPA

We are getting very close to the end of the third quarter in 2016 and if your tax bill for 2016 is likely to be much higher (or lower) than it was in 2015, now is the best time to take a look and adjust your income tax withholdings or estimated tax payments. It is also a good time to look at ways to potentially reduce your taxes due for 2016 and potentially save thousands of dollars.

There are several things that can be done before the end of the year and only a scant few things that can be done after 12/31 to reduce your tax bill so now is the time to look at things like:

  1. Deferring your income if you are going to be in a lower tax bracket in 2017 (moving bonus payments from 2016 to 2017).
  2. Accelerating income if you are going to be a higher tax bracket in 2017 (offer clients an early pay discount).
  3. Accelerating deductions from 2017 to 2016 (pay your property tax bill due in 2017 in 2016 or make your fourth quarter State estimated tax payment in 2016).
  4. Deferring deductions from 2016 to 2017 (pay your property tax bill due in 2017 in 2017 or make your fourth quarter State estimated tax payment in 2017).

There are also credits available for things like installing solar panels on your house… if you are thinking about doing that, doing it now will lower your 2016 tax bill.

Contact me today if you would like to see what options are available to you and how to minimize your tax bill.

William A. Olson CPA, 734-377-3641

Trump v. Clinton – Tax Plans

Posted on by William A Olson, CPA

The 2016 election is in full swing… and one thing we all want to know is, how are the candidates proposing to change the tax rates? While Donald Trump proposes to collapse the tax brackets from 7 to 3, Hillary Clinton is proposing to add a 4% surtax on incomes greater than $5,000,000.

TRUMP Three tax brackets: 12%, 25%, and 33%.

CLINTON Five tax brackets: 10%, 15%, 25%, 28%, 33%, 35%, and 39.6% plus a 4% surtax on Adjusted Gross Incomes over $5,000,000. 

Both will still give favorable tax treatment to long term capital gains and qualified dividends. Taxpayers in all tax brackets and all levels of income will see a tax cut under Donald Trump’s proposal while the wealthiest Americans will pay more under Hillary Clinton’s proposal. This is pretty much what you would expect from each candidate. Of course, they need to get elected first and then get Congress to go along… which is always a long shot.

Want to know how each proposal would affect your taxes? Contact my office for a free consultation. 734-377-3641

 

Simple ways to save money

Posted on by William A Olson, CPA

Most people spend a lot of time worrying about how much money that they make and less time worrying about how much money they spend… and a penny saved is not the same thing as a penny earned. Pennies earned are taxed, pennies saved are not. In fact, if you live in Michigan and you are in the 25% tax bracket, saving $1,000 is the same as making an additional $1,585 in salary/wage income.

So how do you save more money? Here are a few tips that have worked for me.

  1. Make a realistic budget to prioritize your spending. Monitor your progress against your budget to make sure you are on track. Modify your budget as necessary. See How to make a Personal Budget… and stick to it.
  2. Before you go to the grocery store, make a list and stick to it. And plan your meals around your grocery store’s weekly specials.
  3. Use cash or debit cards, not credit cards. Often a credit card can seem like a “bottomless pit” of money and will not let you know when you have overspent.
  4. Stay in instead of going out… invite friends and family over for game night or to watch a movie.
  5. Ditch the cable television and go with Netflix or Amazon Prime.
  6. Clean out your closets and donate old, unused items to charity to receive a fair market value tax deduction.
  7. Instead of buying books, go to the library.
  8. Wait 30 days before making any major purchase to help you decide if it is really worth it.

Saving money will increase your savings, reduce your stress level, and give you the feeling of accomplishment. If you need help preparing a realistic plan to save money, contact my office at 734-377-3641 for a free consultation.

Happy saving!

The Motley Fool: How the 2014 Tax Brackets Work — and How to Make Them Work for You

Posted on by William A Olson, CPA

Here’s a great article that will help you understand the tax brackets and your income tax rate. Many people get confused when I talk about marginal and average tax rates… this article will shed some light on the differences and give you a few tax savings tips to help you move down the tax bracket ladder.

Contact me at wolsoncpa.com if you have questions or would like to set up an appointment.

Three Tax Tips

Posted on by William A Olson, CPA

Give yourself a raise. If you got a big tax refund this year, it meant that you’re having too much tax taken out of your paycheck every payday. Filing a new W-4 form with your employer (talk to your payroll office) will insure that you get more of your money when you earn it. If you’re just average, you deserve about $225 a month extra. Try this easy withholding calculator from Kiplinger now to see if you deserve more allowances.

Increase your retirement savings. One of the best ways to lower your tax bill is to reduce your taxable income. You can contribute to up to $17,500 to your 401(k) or similar retirement savings plan in 2014 ($23,000 if you are 50 or older by the end of the year). Money contributed to the plan is not included in your taxable income.

Go for a health tax break. Be aggressive if your employer offers a medical reimbursement account — sometimes called a flex plan. These plans let you divert part of your salary to an account which you can then tap to pay medical bills. The advantage? You avoid both income and Social Security tax on the money, and that can save you 20% to 35% or more compared with spending after-tax money. The maximum you can contribute to a health care flex plan is $2,500.

For the full list, go here.

If you have questions on these or other ways to reduce your taxes, please contact me at William A. Olson CPA PLLC.

 

Have you received an IRS notice?

Posted on by William A Olson, CPA

Here’s what to do. The full article from IRS.gov is copied below.

What to do if You Get a Notice from the IRS

IRS Summertime Tax Tip 2014-01, July 2, 2014

Each year the IRS mails millions of notices. Here’s what you should do if you receive a notice from the IRS:

  1. Don’t ignore it. You can respond to most IRS notices quickly and easily. And it’s important that you reply promptly.
  2. IRS notices usually deal with a specific issue about your tax return or tax account. For example, it may say the IRS has corrected an error on your tax return. Or it may ask you for more information.
  3. Read it carefully and follow the instructions about what you need to do.
  4. If it says that the IRS corrected your tax return, review the information in the notice and compare it to your tax return.If you agree, you don’t need to reply unless a payment is due.

    If you don’t agree, it’s important that you respond to the IRS. Write a letter that explains why you don’t agree. Make sure to include information and any documents you want the IRS to consider. Include the bottom tear-off portion of the notice with your letter. Mail your reply to the IRS at the address shown in the lower left part of the notice. Allow at least 30 days for a response from the IRS.

  5. You can handle most notices without calling or visiting the IRS. If you do have questions, call the phone number in the upper right corner of the notice. Make sure you have a copy of your tax return and the notice with you when you call.

  6. Keep copies of any notices you get from the IRS.
  7. Don’t fall for phone and phishing email scams that use the IRS as a lure. The IRS first contacts people about unpaid taxes by mail – not by phone. The IRS does not contact taxpayers by email, text or social media about their tax return or tax account.

For more on this topic visit IRS.gov. Click on ‘Responding to a Notice’ at the bottom left of the home page. Also see Publication 594, The IRS Collection Process. You can get it on IRS.gov or call 800-TAX-FORM (800-829-3676) to get it by mail.

Additional IRS Resources:

 

William A. Olson, CPA: Contact me at wolsoncpa.com

Mid-year Tax Planning (re-post)

Posted on by William A Olson, CPA

There are always things you can be doing throughout the year to lower your tax bill at year end. Full year tax projections are a great way to see how what you do now will make your life easier come tax time in 2015 and they can be updated as your circumstances change… contact me at any time if you would like one prepared for you.

As an additional resource, here is an article from Kiplinger with some good ideas you can implement right now.

William A. Olson, CPA: Contact me at wolsoncpa.com

2014 Standard Mileage Rates (IRS)

Posted on by William A Olson, CPA

Here they are.

2014 Standard Mileage Rates

IR-2013-95, Dec. 6, 2013

WASHINGTON — The Internal Revenue Service today issued the 2014 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, 2014, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 56 cents per mile for business miles driven
  • 23.5 cents per mile driven for medical or moving purposes
  • 14 cents per mile driven in service of charitable organizations

The business, medical, and moving expense rates decrease one-half cent from the 2013 rates.  The charitable rate is based on statute.

The standard mileage rate for business 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.

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

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle.  In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

These and other requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical, or charitable expense are in Rev. Proc. 2010-51.  Notice 2013-80contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.

William A. Olson, CPA: Contact me at wolsoncpa.com