Love Your Finances This February
As we embark on the journey through the month of love, we are delighted to present you with a curated selection of valuable financial insights aimed at enhancing your financial well-being. This February, we delve into essential topics including investment strategies designed to optimize your portfolio, the importance of collaboration between your tax and financial professionals to achieve financial success, some crucial IRS regulation updates on Vehicle Depreciation, Childcare Tax Credit, and more! With a commitment to empowering your path to prosperity, FKYG invites you to this month’s share of knowledge and tools necessary to navigate the financial landscape with confidence.
The Intersection of Tax and Financial Planning
In the world of finance, top-tiered tax-efficient strategies are like a hidden treasure – It not only preserves your hard-earned wealth but also propels your financial journey forward. Due to the common lack of communication between your tax professional and financial planner, the results could be suboptimal. Today, we will embark on an enlightening journey through some savvy financial maneuvers. These insights into tax-efficient strategies and investment vehicles that could potentially revolutionize your financial landscape.
ETFs and Index Funds
- Exchange-Traded Funds and Index Funds are the top choices in tax-efficient investing. ETFs boast lower capital gains distributions compared to traditional mutual funds. Similarly, Index Funds, minimize taxable events with their tracking of market indices. This way, investors can optimize their portfolios and reduce tax implications. However, it’s crucial to consult with financial professionals to ensure alignment with investment goals and risk tolerance.
Qualified Opportunity Fund
- Channeling capital gains into QOFs, investors can delay paying taxes on their gains until a later date. While the tax advantages can be appealing, it’s crucial to carefully weigh the benefits against the holding period required to unlock them. With evolving rules and nuances, consulting with financial advisors or tax professionals is paramount to making informed investment decisions in the realm of QOFs.
Municipal Bonds
- For income-seeking investors, municipal bonds emerge as a beacon by offering an attractive source of steady income while minimizing tax liabilities. Unlike taxable bonds, muni bond interest is typically exempt from federal taxes and may also be exempt from state taxes. However, investors should make sure alignment with their financial goals and risk tolerance before incorporating muni bonds into investment portfolios.
Overall, we see that collaboration between tax professionals and financial advisors is key to unlocking the full potential of tax-efficient strategies. Even small improvements in after-tax returns can have a significant impact on long-term portfolio success.
We encourage you to reach out to us to explore how these strategies can be tailored to your unique financial objectives. Together, let’s navigate the maze of taxes and investments, ensuring your financial ship sails smoothly towards prosperity.
New IRS Employer-Provided Childcare Tax Credit Web Page
The IRS has launched a new web page on IRS.gov to guide businesses on leveraging the Employer-Provided Childcare Tax Credit, offering relief for those providing childcare services to employees. This tax credit of up to $150,000 annually aims to alleviate expenses by covering 25% of qualified childcare facility expenditures and 10% of other qualified childcare expenses. It allows for carryback and carryforward options under general business credit for up to 20 years. Explore further details on the IRS’s new web page at their site for the latest updates!
2024 Vehicle Depreciation Limits Released by IRS
Stay informed about the latest Section 280F depreciation deduction limits for passenger autos, including trucks and vans, placed in service during 2024. For passenger autos subject to bonus depreciation, the limits are $20,400 for the first year, $19,800 for the second year, $11,900 for the third year, and $7,160 for subsequent years. For autos not eligible for bonus depreciation, the limits are $12,400 for the first year, with subsequent years following a similar pattern. Wanna see what’s the best treatments for your car? We would love to chat further!
IRS Updates Form 1099-K FAQs for Clarity
Discover the latest revisions to the IRS’s frequently asked questions for Form 1099-K, Payment Card and Third Party Network Transactions, including significant changes in key sections such as General Information, What to Do If You Receive a Form 1099-K, etc. New questions now cover sales through resale ticket sites, online marketplaces, and proceeds from crowdfunding. The IRS has also refreshed the “Understanding your Form 1099-K” page on IRS.gov. Additionally, note that reporting is only required if you receive over $20,000 and have more than 200 transactions in 2023. Reach out to us with any questions regarding your Form 1099-K—we’re here to help you navigate through the complexities with confidence.
Adjusted Employer Shared Responsibility Payment Amounts
IRS just unveiled the adjusted employer-shared responsibility payment (ESRP) amounts for 2025. For 2025, the adjusted amount under Code Sec. 4980H(c)(1) rises to $2,900, while the adjusted amount under Code Sec. 4980H(b)(1) increases to $4,350. Large employers are subject to the ESRP if they fail to offer minimum essential coverage under an eligible employer-sponsored plan. This payment is calculated by multiplying the applicable payment amount by the number of full-time employees. The applicable payment amount escalates for large employers with employees enrolled in a Marketplace health plan and receiving premium tax credits.