By Robert B. Shapiro, CPA, ABV-Owner Shapiro CPAs
With tax season upon us, Shapiro CPAs have stood ready since 1937 to assist You. By selecting Shapiro CPAs you will get better outcomes and confidence that your taxes are done right. Experienced CPAs are trained to improve accuracy, maximize deductions, and minimize tax liability. As a skilled trusted advisor, Robert Shapiro CPA and his skilled team can answer your questions and know what questions to ask to accurately prepare your returns. As a boutique firm, benefits to our Clients extend beyond tax season, with year-round access.
Embedded in the constantly changing tax landscape, 2023 items indexed to inflation saw significant increases. For a bit of math, the 2023 standard deduction has increased to $27,700 for Married Filing Joint (MFJ) and Single to $13,850 respectively. Income Tax brackets adjusted, while the top Federal rate remains 37% it is now applied to taxable income in excess of $693,750 MFJ and $578,125 Single. Federal tax rates applied to long-term capital assets remain preferable to that of ordinary income, despite the 3.8% net investment tax for higher earners. Long-term capital gain rates include an underutilized zero bracket, 15% and 20% rate based upon income. Perhaps the best outcome was that social security benefits increased by 8.7% for 2023 and again by 3.2% for 2024.
To maximize the expanded standard deduction taxpayers could seek to bunch itemized deductions. Charitable contributions remain a powerful tool for the philanthropic. By making a larger charitable gift in a single year donors could take advantage of itemizing in the current year and standard deduction in future years. Affluent taxpayers could explore utilizing a Donor-Advised Fund (DAF) to leverage charitable giving. DAF will enable the taxpayer to claim the fair market value (FMV) of eligible assets contributed to the current year, and avoid tax on the difference between tax basis and FMV, while preserving the ability to make grants to charities for years to come. This deduction can be used to offset years with greater income or even a Roth IRA conversion. By utilizing a DAF, the grantors can maximize charitable proceeds and tax efficiency, without the need for additional tax returns, such as with a personal foundation.
The limitation of the State And Local Tax (SALT) deduction to $10,000 has effectively created a tax increase for residents of high-tax states including NJ and NY. Both NJ and NY have created a so-called workaround in the form of an alternative pass-through entity tax (PTE) which effectively allows the state income tax to be paid and deducted at the entity level. While this does not help for real estate taxes on your home it can be quite valuable. For example, $100,000 of PTE paid would save the taxpayer at the 37% federal rate, $37,000 in tax.
Let Shapiro CPAs caring, experienced team guide you to a stress-free tax season. We have provided timely and accurate tax preparation for over 75 years. And we are uniquely equipped to manage the complex needs of successful individuals and closely held family businesses. As a multi-disciplined professional, I enjoy providing timely and helpful information on a wide range of financial issues. If you are interested in achieving better financial outcomes, please contact me directly. I would welcome the opportunity to help your family and business prosper
*You should discuss any tax or legal matters with the appropriate professional.