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Tax Strategy: 2024 year-end tax planning

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As was the case in 2023, 2024 has so far not produced significant tax legislation impacting year-end tax planning. However, it continues to be impacted by tax legislation enacted in prior years, including the Tax Cuts and Jobs Act, SECURE 2.0, and the Inflation Reduction Act. Those pieces of legislation included deferred effective dates, some of which become effective in 2024, and/or sunset and phase-out dates that can also impact tax planning in 2024.

Inflation adjustments

Like every year, many of the dollar amounts associated with tax provisions are adjusted for inflation. As the inflation rate has declined over the last couple of years, the inflation adjustments for 2024 are somewhat smaller than they were for 2022 and 2023.

  • Tax brackets: The continued inflation adjustments to the tax brackets will result in reduced taxes on taxable incomes that are at the same level as in 2023.
  • Standard deduction: The significantly increased standard deduction from the Tax Cuts and Jobs Act continues to be adjusted for inflation for 2024 to $14,600 for single filers, $21,900 for head of household filers, and $29,200 for joint filers. This will continue to make the standard deduction more attractive to many taxpayers than itemizing deductions. This simplifies tax return preparation for taxpayers claiming the standard deduction, but may also affect taxpayer behavior since taxpayers claiming the standard deduction no longer get a tax benefit from activities such as charitable giving and home ownership.
  • Estate and gift tax unified credit: The significantly increased unified credit from the Tax Cuts and Jobs Act continues to be adjusted for inflation in 2024 to $13,610,000.
  • Retirement plans: Inflation adjustments for 2024 to retirement provisions include IRA contribution limits to $7,000 from $6,500, with the catch-up amount remaining $1,000. Limits for 401(k) plan contributions increased to $23,000 for 2024, with a limit of $30,500 for those age 50 and over.

Tax Cuts and Jobs Act

The individual provisions of the Tax Cuts and Jobs Act currently expire after 2025. They therefore remain effective for 2024 and 2025. However, some of the expiring provisions may warrant tax planning for 2024 and 2025. If the standard deduction is significantly reduced, taxpayers may consider taking steps to postpone charitable contributions until 2026 when itemized deductions are likely to be more beneficial.

A close up of the capital building with an American flag

Wealthier taxpayers facing a halving of the unified credit in 2026 may wish to consider gifts in 2024 and 2025 to reduce the taxable estate before 2026. The Supreme Court’s decision this year in Connelly holding that a contractual obligation to redeem a deceased shareholder’s shares at fair market value is not necessarily a liability that reduces the corporation’s value for federal estate tax purposes warrants a review, and perhaps restructuring of buy-sell agreements, with even the Supreme Court suggesting the use of cross-purchase agreements between shareholders.

Many of the business provisions of the Tax Cuts and Jobs Act were made permanent. A few, however, have already expired or are phasing out. These include the full expensing of research and experimental costs, the limits on deduction of business interest, and bonus depreciation. Congress has made efforts to restore these provisions in legislation that has passed the House but has so far failed to pass the Senate. Restoration of these provisions was tied to an increase in the Child Tax Credit. For 2024, therefore, these provisions remain in their phase-out status and have not yet been restored. The legislative proposals would have restored them retroactively; however, as time passes, it is not clear that retroactive restoration would be retained.

SECURE 2.0

SECURE 2.0 made many retirement-related changes to the Tax Code, with many phased in over a period of years, including 2024. It added several new provisions for penalty-free distributions from retirement accounts. In addition to terminal illnesses and qualified disasters effective for 2023, it also added, effective for 2024, penalty-free withdrawals up to $1,000 for emergency expenses and withdrawals of the lesser of $10,000 or 50% of the account value in cases of domestic abuse.

The law also added a provision for employer 401(k) matching of employee student loan payments, and made several enhancements to SIMPLE plans, several of which became effective for 2024. Effective 2024 and later, 529 plan beneficiaries can roll over an aggregate of $35,000 in excess funds to a Roth IRA, and starting in 2024, employers without a retirement plan are entitled to a tax break for starter 401(k) plans or 403(b) safe harbor plans.

The act had required beneficiaries of inherited IRAs who were not eligible designated beneficiaries such as spouses to take distributions within 10 years of the IRA owner’s death. The IRS later clarified that, if the IRA owner had started required minimum distributions before death, the beneficiary was required to take the distributions ratably over the 10-year period rather than at the end of the 10-year period. Since many taxpayers and tax practitioners had not anticipated the ratable distribution requirement, the IRS agreed to waive penalties for failure to make required minimum distributions in 2022 and 2023 and has now also waived penalties for failure to make required minimum distributions in 2024 for IRA owners who died in 2023.

Starting in 2024, required minimum distributions are no longer required from designated Roth accounts.

Inflation Reduction Act

Many of the provisions of the Inflation Reduction Act, enacted in 2022, have delayed effective dates. Provisions becoming effective for 2024 include:

  • Clean vehicle credit transfer: The rules for transfer to a dealer of the clean vehicle credit apply to vehicles placed in service after Dec. 31, 2023.
  • Zero-emission nuclear power: The new zero-emission nuclear power production credit applies to electricity produced and sold after Dec. 31, 2023.

Digital asset reporting

The expansion of broker reporting of digital asset transactions on Form 1099-B and the new Form 1099-DA has been proposed and delayed for several years. Currently, the reporting rules for Form 1099-DA do not apply until 2025 and the requirement for cost-basis reporting until 2026.

Third-party reporting

The requirement for third-party payment processor reporting has also been delayed for a few years. For 2024, reporting on Form 1099-K is required if the taxpayer receives $5,000 or more. Under current law, this is still scheduled to phase down to $600, although proposals have been made in Congress to increase the reporting limit.

Summary

In addition to these tax law changes effective for 2024, the usual tax planning strategies remain in effect. These include postponing income and accelerating deductions; bunching itemized deductions every other year and taking the standard deduction in the off year; year-end review of investments for possible offset of capital gains and losses; and maximizing charitable contributions and qualified retirement plan contributions. Proposals from the presidential candidates, even if some are eventually enacted, are not likely to have a direct impact on 2024 tax returns.

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IRS employee union requests emergency relief

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The National Treasury Employees Union, which represents workers at the Internal Revenue Service among 37 federal agencies and offices, has asked a federal judge for emergency relief to preserve the union rights of federal employees while NTEU’s legal challenge to President Trump’s executive order stripping unions of collective bargaining rights can be heard in court.

Trump signed an executive order last Thursday removing the requirements from employees at agencies including the Treasury Department that he deemed to have national security missions. On Monday, the NTEU filed a lawsuit to stop the move arguing that Trump’s rationale for protecting national security was just a way to end union protections for federal workers. The administration also wants to prevent the unions from collecting dues automatically withheld from employee paychecks.

NTEU’s request for a preliminary injunction was filed Friday with U.S. District Judge Paul Friedman.

 “NTEU seeks emergency relief to protect itself and the workers it represents from this unlawful attempt to eliminate collective bargaining for some two-thirds of the federal workforce,” the request stated.

The NTEU contended that the Trump administration’s executive order claims that allowing workers to join a union was a threat to national security were absurd.

“We all know this has nothing to do with national security and that the true goal here is to make it easier to fire federal employees across government,” said NTEU national president Doreen Greenwald in a statement Friday. “Just five days after declaring the administration would no longer honor our contract with Health and Human Services, thousands of brilliant civil servants who work tirelessly to improve public health were let go for spurious reasons and little recourse to fight back.”

The union pointed out that Congress declared 47 years ago that collective bargaining in the federal sector was in the public’s interest by giving employees a voice in the workplace and allowing labor and management to work together. It acknowledged there is a narrow exemption in the law for groups of employees whose work directly impacts national security, but argued that Trump’s executive order is blatant retaliation against federal sector unions and ignores the laws passed by Congress creating the agencies.

In agencies where a reduction-in-force has been announced, NTEU’s contracts provide time for employees to respond to a RIF notice and explore alternatives to mitigate the impact of the layoffs.

Earlier this week, after two court rulings in California and Maryland, the IRS’s acting commissioner, Melanie Krause, announced the IRS would be bringing back approximately 7,000 probationary employees who had been fired and then put on paid administrative leave.

A bipartisan bill has been introduced in Congress to preserve collective bargaining rights for federal employees. The Protect America’s Workforce Act (H.R. 2550), sponsored by Rep. Jared Golden, D-Maine, and Brian Fitzpatrick, R-Pennsylvania, would overturn Trump’s executive order stripping collective bargaining rights from hundreds of thousands of federal workers at multiple agencies.  Separately, eight House Republicans and every House and Senate Democrat have sent letters to the White House condemning the executive order.

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Estate planning for the Tax Cuts and Jobs Act expiration

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The political calculus involved with the details of estate planning next year and beyond may be distracting financial advisors and clients from a larger, simpler conversation, one expert says.

On the off chance that the federal estate-tax exemption levels of $13.99 million for individuals (and double for couples) revert to half those amounts when Tax Cuts and Jobs Act provisions expire in 2026, only 0.2% of households would face potential duties upon transfer of assets, according to Ben Rizzuto, a wealth strategist with Janus Henderson Investors‘ Specialist Consulting Group. He predicted that most financial advisors and high net worth clients, such as those he works with and others across the industry, will see no changes. 

With few other revenue-raising provisions available to President Donald Trump and Republican lawmakers, they’re not likely to shield all estates from payments to Uncle Sam — as much as they might like to play undertaker to the “Death of the Death Tax,” Rizzuto said, using the label for estate taxes adopted by critics favoring bills like the “Death Tax Repeal Act.” Lawmakers’ decisions on future exemptions from the taxes (and when they make those decisions) remain out of advisors’ control. Meanwhile, they must remind clients that estate planning is much more than having a will and avoiding taxes, Rizzuto said.

“For financial advisors and clients, I would expect for many of them not to have to worry about federal estate taxes next year,” he said in an interview. “Even though they may not have to worry about it, there are still a lot of good conversations to be had.”

READ MORE: Tax Cuts and Jobs Act expiration: A guide for financial advisors

The 1%

Trust tools that reduce the value of the assets that will transfer to spouses or other beneficiaries upon a client’s death, combined with the available statistics about the shrinking share of estates subject to taxes, could bring some peace of mind to clients. The 2017 tax law itself pushed down estate tax liability as a percentage of gross domestic product to a quarter of its 2001 level, according to an analysis by the “Budget Model” of the University of Pennsylvania’s Wharton School. Just two years after the law’s passage, the number of taxable estates had plummeted to 1,275 — or 1% of the number at the beginning of the century.

At the same time, advisors could raise any number of questions with clients about their estates that involve varying degrees of expertise and collaboration with outside professionals. And many surveys have found that clients are expecting them to do so. For example, at least 70% out of a group of 10,000 adults contacted in January by WeAreTalker (formerly OnePoll) on behalf of online legal information service Trust & Will said advisors should offer estate planning. In addition, 40% of the group said they would switch to an advisor who provided that service.

“We’re seeing a fundamental shift in client expectations,” Trust & Will CEO Cody Barbo said in a statement. “The findings are clear. Advisors who fail to integrate estate planning into their practice aren’t just missing an opportunity; they are facing a threat to their client base as wealth transfers to younger generations over the next two decades.”

READ MORE: Ethical wills can be a crucial tool for estate planning

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Get back to the planning basics

In that context, advisors and their clients should steer clear of trying to make sense of a complicated, ever-changing flow of news from Capitol Hill as Trump and the GOP pursue major tax legislation with a year-end deadline, Rizzuto said. If clients truly could be on the hook for estate taxes, a grantor retained annuity trust, a spousal lifetime access trust or gifting strategies may eliminate the possibility. One method involved with the latter could set them up in the future to receive stock that is “highly appreciated with lower basis,” Rizzuto noted, citing the example of equities that have gained a lot of value that a client could give to their parents.

“Why not gift them upstream?” Rizzuto said. “My father holds it. I tell him, ‘Dad, you have to do these things: Live for another 12 months, make sure you don’t sell, make sure that you update your will or your instructions to gift it back to me when you die.’ That’s another idea that we’ve been talking about with advisors.”

From another perspective, these possible paths forward may beckon to clients this year, if they are tuning into Beltway news about the progress of the tax legislation, he said. To bypass the risk of client perceptions that their advisor isn’t doing any tax planning at all, Washington’s complex maneuvering around the future rules is, “if nothing else,” a “great opportunity for advisors to bring this up at a very high level,” Rizzuto said.

“Advisors will really need to go back to basics and have some foundational conversations with clients,” he said, suggesting their goals with taxes as one key point of discussion. “‘What is it that we actually control within your financial and tax plan?’ When it comes right down to it, it’s really just incomes and deductions.”

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Developing future leaders in accounting: the new imperative in an AI and automation driven era

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As technology continues to automate routine tasks, the role of finance professionals is evolving, demanding deeper capabilities in critical thinking, communication and business acumen. 

Many of PrimeGlobal’s North American firms are focused on cultivating these skills in their future leaders. Carla McCall, managing partner at AAFCPAs, Randy Nail, CEO of HoganTaylor, and Grassi managing partner Louis Grassi shared their views with PrimeGlobal CEO Steve Heathcote on the need for future leaders to balance technological proficiency with human-centered skills to thrive.

AI is transforming the sector by streamlining workflows, automating data analysis and reducing manual processes. However, rather than replacing accountants, AI is reshaping their roles, enabling them to focus on higher-value tasks. In the words of Louis Grassi, AI can be seen as a strategic partner, freeing accountants from routine tasks, enabling deeper engagement with clients, more thoughtful analysis, and ultimately better decision-making. 

Nail emphasized the importance of embracing AI, warning that those who fail to adapt risk being replaced by professionals who leverage the technology more effectively. HoganTaylor’s “innovation sprint” generated over 100 ideas for AI integration, underscoring why a proactive approach to adopting new technologies is so necessary and valuable.

McCall advocates for an educational shift that equips professionals with the skills to interpret AI-generated insights. She stressed that accounting curricula of the future must evolve to incorporate advanced technology training, ensuring future accountants are well-versed in AI tools and data analytics. Moreover, simulation-based learning is becoming increasingly crucial as traditional methods of education become obsolete in the face of automation.

Talent development and leadership growth

As AI reshapes the profession, firms must rethink how they develop and nurture their future leaders. To attract and retain top talent, firms need to prioritize personalized development plans that align with individual career goals. 

HoganTaylor’s approach to talent development integrates technical expertise with leadership and communication training. These initiatives ensure professionals are not only proficient in accounting principles but also equipped to lead teams and navigate complex client interactions.

Nail underscored the growing importance of writing and presentation skills, as AI will handle routine tasks, leaving professionals to focus on higher-level analytical and decision-making responsibilities.

Soft skills are the success skills

While technical proficiency remains vital, future leaders must also cultivate critical thinking, communication and adaptability — skills McCall refers to as the “success skills.” McCall highlights the necessity of business acumen and analytical communication, essential for interpreting data, advising clients and making strategic decisions. 

Recognizing teamwork and collaboration remain crucial in the hybrid work environment, McCall explained in detail how AAFCPA fosters collaboration through structured remote engagement strategies such as “intentional office time,” alcove sessions and stand-up meetings. Similarly, HoganTaylor supports remote teams by offering training for career advisors to ensure effective mentorship and engagement in a dispersed workforce.

McCall emphasized why global experience can be valuable in leadership development. Exposure to diverse markets and accounting practices enhances professionals’ adaptability and broadens their perspectives, preparing them for leadership roles in an increasingly interconnected world.

Grassi reminded us that an often-overlooked leadership skill is curiosity. In his view the most effective leaders of tomorrow will be inherently curious — not just about emerging technologies but about clients, market shifts and global trends. Encouraging curiosity and continuous learning within our firms will distinguish the true industry leaders from those simply reacting to change.

A balanced future

What’s clear from speaking to our leaders is PrimeGlobal’s role in fostering trust, community and knowledge sharing. McCall recommended member-driven panels to discuss AI implementation and automation strategies and share best practice. Nail, on the other hand, valued PrimeGlobal’s focus on addressing critical industry issues and encouraged continuous evolution to meet professionals’ changing needs.

The future of leadership in the accountancy profession hinges on a balanced approach, leveraging AI to enhance efficiency while cultivating essential human skills that technology cannot replicate, which Grassi highlights skills including leadership and building client trust.

As McCall and Nail advocate, the next generation of accountants must be agile thinkers, skilled communicators and strategic decision-makers. Firms that invest in these competencies will not only stay competitive but will also shape the future of the industry by developing well-rounded leaders prepared for the challenges ahead.

By investing in both AI capabilities and essential human skills, firms can not only future proof their leadership but also shape a resilient and forward-thinking profession ready to meet the challenges of the future.

As Grassi concluded, while technical skills provide the foundation, leadership in accounting increasingly demands emotional intelligence, empathy and adaptability. AI will change how we perform our work, but human connection, trust and nuanced judgment are irreplaceable. Investing in these human-centric skills today is critical for firms aiming to build resilient leaders of tomorrow. To remain relevant and thrive, professionals must prioritize developing strong success skills that will define the leaders of tomorrow.

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