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

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

Year End Tax Planning

Posted on by William A Olson, CPA

The 2013 tax year is almost over and it is the perfect time to do some end of year tax planning… before it is too late. Many tax planning decisions can only be made before December 31st.

The first step is to estimate or project your tax liability based on the information you have now recognizing that the final numbers are subject to change. The second step is to play the “what-if” game.

  • What if I sell my Ford stock for a capital gain?
  • What if I wait to pay my winter tax bill until next year?
  • What if I buy a new computer for my business?
  • What if my bonus is 50% bigger than it was last year?

The ultimate goal of a good tax plan is to lower your overall liability. But a secondary goal is to make sure you are not going to get penalized for underpaying your liability for the current year. Either way, the objective is to save you money.

Good tax planning can you save you substantial amounts of money… and help you avoid tax penalties and interest. I offer my clients a comprehensive tax plan based on your individual circumstances. Contact me today to get yours.

Will I go to jail for not paying my taxes?

Posted on by William A Olson, CPA

… and other frequently asked questions from the IRS.

Why Should I File My Tax Return as Soon as Possible?

There are two advantages to filing as soon as possible:

  • Generally, if a taxpayer is due a refund for withholding or estimated taxes paid, it must be claimed within 3 years of the return due date or risk losing the right to it. The same rule applies to a right to claim a tax credit such as the Earned Income Credit (EIC).
  • Self-employed persons who do not file a return will not receive credits toward Social Security retirement or disability benefits. Failure to file results in not reporting any self-employment income to the Social Security Administration.

What If I Owe More Than I Can Pay?

Even if a taxpayer doesn’t have enough money to pay, returns should be filed to avoid further penalties for failure to file. The IRS will assist in finding a solution to the problem.

The IRS has streamlined its policies to offer alternative account resolutions if a taxpayer cannot pay in full with the return:

  • The IRS will help to set up an installment agreement when the situation warrants. Installment payments allow taxpayers to pay the tax debt over time.
  • The IRS will consider whether an offer in compromise is an appropriate solution.

What If I Don’t File Voluntarily?

The IRS is taking enforcement steps for those who repeatedly choose not to comply with the law. IRS employees will prepare returns when taxpayers do not file. The returns prepared by the IRS might not give credit for deductions and exemptions a taxpayer may be entitled to receive. Bills will be sent to those taxpayers for the tax due, plus penalties and interest.

People who repeatedly don’t comply with the law are subject to additional enforcement measures.

How Can I Avoid Owing Money on Next Year’s Return?

Many people don’t file tax returns because they don’t have enough money to pay the tax they owe. They find out after completing their return that their withholding or Estimated Tax payments do not equal their tax liability.

To help avoid this situation, the IRS can advise taxpayers how to ask an employer to withhold enough tax from their pay. For any income that is not subject to withholding, the IRS can provide information necessary to make quarterly payments to cover any amount to be owed. To make payments electronically, see Payment Options – Ways To Make a Payment or go to the EFTPS Web site.

Changes in financial circumstances could have an impact on taxes. For example, an increase in income, divorce, or selling an asset, may require adjustments to withholding or estimated payments.

By taking these steps, taxpayers will be better able to meet their tax obligations and avoid tax day surprises.

Will I Go to Jail?

A long-standing practice of the IRS has been not to recommend criminal prosecution of individuals for failure to file tax returns, provided they voluntarily file, or make arrangements to file, before being notified they are under criminal investigation. The taxpayer must make an honest effort to file a correct return and have income from legal sources. A letter from the IRS concerning taxes is not a notice that a taxpayer is under criminal investigation.

The IRS helps to get people back into the system as part of its long-term plan to improve voluntary tax compliance. The IRS wants to get people back into the system, not prosecute ordinary people who made a mistake. However, flagrant cases involving criminal violations of tax laws will continue to be investigated.

References/Related Topics