How to Get Started with Your Taxesđź’°

MichaelAngell_CFFP
MichaelAngell_CFFP FP FPQP, FP 512, FP 514, CFFP Faculty & Instructors Posts: 5
edited August 20 in Financial Planners Professional Community

The tax deadline is quickly approaching and April 15 will be here before you know it.  People are frantically calling their tax professionals and asking questions like, “How many tax pros does it take to change a lightbulb?”  The answer is, probably the same as last year.  But seriously.  As we all prepare to do our civic duty and pay Uncle Sam to keep the country running, it might seem like business as usual.  Nonetheless, there are a few points financial planners should keep in mind as we head into 2024.

First, let us look at IRAs.  The IRA contribution deadline is April 15, 2024.  That might not seem like a big deal, until a client calls on April 10 to tell you they owe taxes.  Assuming they are otherwise eligible, an IRA deduction is a tried and true method to save tax dollars.  What about RMDs?  Remember, SECURE ACT 2.0 also changed the RMD age.  The RMD age for tax year 2023 is 73.  If a client forgot to take their RMD, they can now request a waiver of penalty by filing IRS form 5329.  Next, as of this writing, generally only the ten-year liquidation rule applies to IRAs inherited by non-spouses.  However, this topic can get murky quickly, depending on when the deceased passed and whether or not they had begun their RMDs.  When in doubt, calculate the specifics.

Second, let us look at stocks.  The stock market had a banner year in 2023, with the S&P 500 finishing up 24%.  No doubt many clients had capital gains.  It would be ideal from a tax perspective to leave those gains as unrealized on the brokerage statement.  In the event the client has realized gains, check their most recent tax return to see if they have carry forward losses they can use.

Third and finally, do not be in a rush to file.  Why?  Preliminary 1099s issued by brokerage firms have a nasty habit of getting corrected before March 15.  Clients with complex portfolios would be best served by waiting until late March or perhaps early April to file. 

Above all, financial planners should have a trusted tax professional they can turn to on a regular basis with specific tax questions. 

If you do not have one, get one. 

Many happy returns.🎉

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