YETPL Individual 2024 : simplebooklet.com

888.873.2545 | connect@dmjps.com | dmjps.com Individual Income Tax Planning Leer From the North Carolina mountains to the coast, DMJPS is dedicated to providing personalized guidance tailored to your specic nancial goals. Our aim is to empower you to maximize your tax advantages and enter 2025 with condence and clarity. As 2024 concludes, it's an opportune me to evaluate your nancial situaon and leverage available tax planning strategies. With the recent elecon of President Donald Trump, there may be forthcoming changes to the tax code. Key provisions of the Tax Cuts and Jobs Act (TCJA) are sll scheduled to expire at the end of 2025, but the new administraon has expressed intenons to extend these tax cuts. Given this evolving landscape, proacve planning is essenal. Consider higher rerement contribuon limits, updates from the SECURE Act 2.0, and strategies for charitable giving, capital gains, and deducons to opmize your tax posion. DMJPS is well equipped to assist you with your you with your tax reporting matters across the nation and beyond. As a member of CPAmerica, Inc. and Crowe Global, DMJPS leverages a network of over 200 independent accounting and advisory firms spanning more than 120 countries. DMJPS is committed to offering the personalized attention, loyalty, and genuine care you expect from a local firm, while providing comprehensive services and global connections on par with larger national firms. From the beginning, our mission has been clear: to exceed expectaons, providing thorough and personalized support to our clients. And as we commemorate our 75th anniversary our commitment is unwavering and our journey forward is steadfast: to Empower You to Be Greater. Our Oce Locaons:• GREENSBORO• ASHEVILLE• BOONE• DURHAM• MARION• SANFORD• WILMINGTON

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Page 2 of 41 Table of Contents In addion to the bookmarks, the topics below are clickable links for easy navigaon.2024 Tax Law Updates & Highlights ........................................................................................................................................................................... 3 INCOME ................................................................................................................................................................................................................... 11 Ordinary Tax Rates ............................................................................................................................................................................................. 11 Capital Gains & Losses ....................................................................................................................................................................................... 12 Net Investment Income Tax (NIIT) ...................................................................................................................................................................... 13 Passive Income & Passive Losses ........................................................................................................................................................................ 15 Cryptocurrency .................................................................................................................................................................................................. 17 Alternave Minimum Tax (AMT) ........................................................................................................................................................................ 18 DEDUCTIONS & CREDITS ......................................................................................................................................................................................... 19 Standard Deducon ........................................................................................................................................................................................... 19 Itemized Deducons .......................................................................................................................................................................................... 20 Charitable Giving ................................................................................................................................................................................................ 21 Child Tax Credit (CTC) ......................................................................................................................................................................................... 21 RETIREMENT............................................................................................................................................................................................................ 22 Tradional & Roth IRAs ...................................................................................................................................................................................... 22 SIMPLE IRA ......................................................................................................................................................................................................... 24 SEP IRA ............................................................................................................................................................................................................... 25 401(k) ................................................................................................................................................................................................................. 26 403(b) ................................................................................................................................................................................................................ 26 Required Minimum Distribuons (RMDs) .......................................................................................................................................................... 27 Social Security .................................................................................................................................................................................................... 28 DEPENDENTS & EDUCATION.................................................................................................................................................................................... 29 Student Loan Interest ......................................................................................................................................................................................... 29 Kiddie Tax ........................................................................................................................................................................................................... 30 Employing Family Members ............................................................................................................................................................................... 31 Educaon ........................................................................................................................................................................................................... 32 MEDICAL.................................................................................................................................................................................................................. 33 Health Savings Account ...................................................................................................................................................................................... 33 Flexible Spending Account ................................................................................................................................................................................. 34 Long-Term Care Insurance ................................................................................................................................................................................. 35 GIFTS & ESTATES ...................................................................................................................................................................................................... 36 Gi Tax Exclusion ............................................................................................................................................................................................... 36 Estates................................................................................................................................................................................................................ 37 MISCELLANEOUS ..................................................................................................................................................................................................... 38 Online IRS Account ............................................................................................................................................................................................. 38 Maintaining Tax Records .................................................................................................................................................................................... 38 Avoiding Scams .................................................................................................................................................................................................. 39 Identy Protecon PIN (IP PIN) .......................................................................................................................................................................... 39 Addional Resources ......................................................................................................................................................................................... 39 CLOSING COMMENTS .............................................................................................................................................................................................. 41

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Jump to Table of Contents Page 3 of 41 2024 Tax Law Updates & Highlights 2024 Elecon Brings Potenal Tax Changes for Individuals With President-Elect Donald Trump’s re-elecon and a Republican-controlled Congress, 2024 marks a pivotal year for tax planning. Extensions of the Tax Cuts and Jobs Act (TCJA) provisions—such as lower individual tax rates, a higher standard deducon, and enhanced child tax credits—are likely. Addionally, proposals to eliminate federal taxes on Social Security income, exclude overme and p income from taxable wages, and increase the SALT deducon cap could provide meaningful tax savings for many taxpayers, if enacted. Further adjustments may include raising the mortgage interest deducon limit, expanding green energy credits, and modifying ACA premium tax credits. Proacve planning now ensures you are prepared to opmize tax beneﬁts while navigang these potenal changes eﬀecvely. Planning Suggesons Lower Tax Rates • What May Change: Individual tax rates are expected to remain low, with current rates unchanged for 2024. However, proposed changes may reduce rates further in the future, introducing a 15% tax rate for incomes up to $170,000 and a 30% rate for incomes above that. These potenal changes could impact tax planning strategies for higher earners. • What You Can Do: While rates for 2024 will stay the same, reviewing how your income is taxed can help you prepare for potenal changes. For example, if tax rates decrease further, deferring bonuses, consulng income, or other payments to future years could save you money. Self-employed individuals might consider delaying invoicing for completed work into 2025 to beneﬁt from lower rates if they take eﬀect. Addionally, maximizing contribuons to tax-advantaged accounts like 401(k)s and Health Savings Accounts (HSAs) before year-end can lower your taxable income, keeping you in a lower bracket and reducing your overall tax liability. Child Tax Credit • What May Change: The enhanced child tax credit, which provides signiﬁcant savings for families with qualifying children, is expected to connue. However, the credit begins to phase out for adjusted gross incomes (AGI) above $400,000 for married couples ﬁling jointly and $200,000 for single ﬁlers. • What You Can Do: If your income is near or above these thresholds, reducing your AGI could help preserve eligibility for the credit. Contribung to a tradional IRA is one opon, but be aware of the phaseout limits for deducng contribuons. For 2024, the deducon phases out when AGI is between $123,000 and $143,000 for married couples ﬁling jointly ($77,000 to $87,000 for single and head of household ﬁlers). If you exceed these limits, consider pretax contribuons to a 401(k) or a Health Savings Account (HSA) instead. Addionally, making charitable donaons by year-end can also reduce your AGI and help maximize the credit.

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Jump to Table of Contents Page 4 of 41 SALT Deducon Cap • What May Change: The current $10,000 cap on state and local tax (SALT) deducons could increase in 2025 for some taxpayers. • What You Can Do: If the cap rises, deferring property taxes or state income tax payments to 2025 could provide greater beneﬁts. However, if the cap stays the same, prepaying these taxes before December 31, 2024, may allow you to maximize deducons under current rules. This is parcularly important for high-income earners who itemize deducons. Mortgage Interest Deducon • What May Change: There has been acknowledgment that the current mortgage interest deducon limit of $750,000 is too low for many taxpayers, especially those in higher-cost housing markets. As a result, there are discussions about potenally returning the limit to its previous level of $1,000,000. This change would provide more ﬂexibility for individuals with larger mortgages to deduct interest on their home loans. • What You Can Do: If you’re planning to buy a home, consider structuring your mortgage to take advantage of the higher deducon limit if it becomes law. This means that if the limit increases, you could potenally deduct more of the interest you pay on a larger mortgage. If you already own a home and have a mortgage close to the current $750,000 limit, reﬁnancing your loan next year might allow you to beneﬁt from the higher deducon limits if they pass. However, it’s important to remember that these changes are sll under discussion, and you should wait for conﬁrmaon before making any decisions. Social Security Income • What May Change: Discussions are ongoing about eliminang federal income taxes on Social Security income, but no changes have been made yet. For now, Social Security beneﬁts are sll taxed at the federal level. • What You Can Do: If you’re rered and planning withdrawals from your tradional IRA or 401(k), consider delaying these withdrawals unl any potenal changes to Social Security taxes are ﬁnalized. This could help minimize your taxable income and reduce future tax burdens. Another opon is to convert some of your tradional IRA savings into a Roth IRA. With a Roth IRA, you pay taxes on the conversion now, but future withdrawals are tax-free. This can help lower your taxable income in the future, especially if you expect to be in a higher tax bracket later. Also, since Roth withdrawals are generally tax-free, you could have lower taxable income in rerement, and thereby subject less of your social security income to tax. However, keep in mind that the conversion will increase your taxes in the year it’s done, so weigh this against your long-term tax strategy.

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Jump to Table of Contents Page 5 of 41 Overme and Tip Income • What May Change: Proposals to exempt overme and p income from federal taxaon were proposed. • What You Can Do: These changes are considered among the least-likely to become law. However, if these changes are implemented, any addional income from overme or ps will not be taxed, increasing your take-home pay. You can use this extra income to increase your contribuons to rerement accounts like an IRA or 401(k), pay down high-interest debt, or build your savings. Since this could signiﬁcantly impact your disposable income, it’s important to plan how to allocate the extra funds eﬀecvely for your ﬁnancial goals. Health Insurance Subsidies • What May Change: The enhanced premium tax credits (subsidies) introduced under the American Rescue Plan Act of 2021 are set to expire at the end of 2025. These enhanced subsidies have signiﬁcantly reduced health insurance premiums for many Americans purchasing insurance through the ACA marketplace. Although President-elect Donald Trump has consistently expressed opposion to the Aﬀordable Care Act (ACA), there has been no speciﬁc proposal to eliminate these subsidies sooner. However, with the new administraon, the future of these subsidies remains uncertain, and it's possible that changes could be made in the future. • What You Can Do: If you currently receive these enhanced subsidies, it’s important to plan ahead for potenal changes. If these subsidies expire as scheduled in 2025, you could face higher premiums for your health insurance coverage. To prepare, monitor your income closely to ensure you stay within the eligibility limits for subsidies. Contribung to tax-deferred accounts like a 401(k) or IRA can lower your taxable income and help you maintain eligibility. Addionally, stay informed about any legislave updates that may aﬀect the ACA or the subsidies, as the new administraon may introduce changes that impact your healthcare costs. Reviewing your health insurance plan and considering your opons for 2026 will help you adapt to any changes in the future. Auto Loan Interest Deducon • What May Change: Interest on loans for U.S.-manufactured vehicles may become deducble. • What You Can Do: While this proposal could oﬀer tax savings in the future, it’s essenal to keep in mind that, for now, interest on personal auto loans is not deducble. If this change is passed, you would need to itemize deducons, so it may only beneﬁt higher-income earners who typically itemize their deducons. If you’re planning to purchase a vehicle, it may be worthwhile to consider whether you are likely to itemize in the future and how this change might aﬀect your long-term tax strategy. Addionally, while waing for this proposal to pass may not make a signiﬁcant diﬀerence in the short term, it’s sll a good idea to track your auto loan interest and prepare for potenal tax beneﬁts if and when the deducon is implemented. If the law changes, this could be an opportunity to take advantage of a new tax break to oﬀset the costs of purchasing a vehicle.

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Jump to Table of Contents Page 6 of 41 Tax Relief for North Carolina Residents Aﬀected by Hurricane Helene and Hurricane Debby In September 2024, Hurricane Helene caused signiﬁcant destrucon in western North Carolina, while Hurricane Debby impacted the eastern part of the state. In response, the IRS and the North Carolina Department of Revenue implemented broad tax relief measures to support aﬀected individuals and businesses across all North Carolina counes. These provisions, aimed at easing the tax burden during recovery, oﬀer extended deadlines and penalty waivers for various ﬁlings and payments. Extended Filing Deadlines If you extended your 2023 tax return, typically due by October 15, 2024, you now have unl May 1, 2025, to ﬁle without penales. This extension applies to individual, corporate, S-corporaon, and partnership returns. It also includes the 4th quarter 2024 esmated tax payment, originally due on January 15, 2025. However, it excludes 2025 quarterly esmated payments, which remain due as scheduled. Penalty Relief Penales for late ﬁlings and payments are waived if completed by May 1, 2025, covering all due dates aer September 25, 2024. This consolidated relief window also extends deadlines previously set for February 3, 2025, under Hurricane Debby provisions, ensuring consistent relief statewide. This relief extends to federal penales for taxpayers in NC, SC, GA, AL, and parts of FL, TN and VA. In general, these states have similar relief on state obligaons. Deducng Disaster Losses in Federally Declared Areas For tax years through 2025, personal casualty losses are deducble only if ed to a federally declared disaster, such as Hurricane Helene or Debby. Taxpayers may choose to claim these disaster-related losses either in the year they occurred or on the prior year’s return (the “preceding year disaster loss deducon” – in this case, 2023), which can oen result in faster refunds. • Deducon Requirements: Currently, losses from Hurricanes Helene and Debby are subject to a $100 per-casualty ﬂoor and the 10% of AGI limitaon. Addionally, these deducons are available only to taxpayers who itemize. If Congress designates these hurricanes as qualiﬁed disasters, the per-casualty ﬂoor would increase to $500, the 10% AGI limitaon would be waived, and the deducon would be available to those taking the standard deducon. • Deadline for Preceding Year Claims: If you choose to deduct a 2024 loss on your 2023 return, ﬁle an amended or original return by October 15, 2025. Addional Support for Businesses and Non-Casualty Losses Losses related to business property or proﬁt-seeking transacons may qualify as deducble disaster losses without personal casualty loss limitaons, providing ﬂexibility in claiming disaster relief.

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Jump to Table of Contents Page 7 of 41 Rerement Plan Withdrawals and Other Relief Special provisions allow withdrawals up to $22,000 from rerement accounts without early withdrawal penales, with opons to spread the income over three years or repay within that me to avoid taxes. Addionally, FEMA declaraons allow for other assistance, including FEMA grants and tax-exempt purchases using FEMA or Red Cross-issued debit cards. These comprehensive relief measures ensure that residents and businesses impacted by the recent hurricanes have ﬂexibility in focusing on recovery while accessing signiﬁcant tax beneﬁts. If you need guidance in navigang these provisions or ensuring compliance, please reach out to our oﬃces for assistance. Corporate Transparency Act (CTA) for Individual Taxpayers Tax Law Updates: Corporate Transparency Act (CTA) Starng January 1, 2024, the Corporate Transparency Act (CTA) requires many U.S. enes, including LLCs and partnerships, to report detailed informaon about their beneﬁcial owners to the Financial Crimes Enforcement Network (FinCEN). This is part of a larger eﬀort to combat money laundering and ﬁnancial crimes, and it's essenal for small business owners to understand their reporng obligaons. Who Must File? Most LLCs, corporaons, and other business enes formed by ﬁling with state authories are required to report under the CTA. Exempons apply to certain enes, such as: • Large operang companies with over 20 full-me employees, more than $5 million in gross receipts or sales, and an operang presence at a physical oﬃce within the U.S., and • Regulated enes like banks, investment companies, and insurance companies Who Is Exempt? The CTA provides speciﬁc exempons, mainly for large operang companies and heavily regulated enes like banks, insurance companies, and publicly traded companies. These enes are excluded because they already have substanal reporng requirements through other laws. However, if you own an LLC or a small business without the threshold number of employees and revenue, you are likely required to report. What Informaon Must Be Reported? For businesses required to ﬁle, you must report informaon on your beneﬁcial owners, deﬁned as anyone who: • Owns or controls 25% or more of the enty, or • Exercises "substanal control" over the company.

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Jump to Table of Contents Page 8 of 41 • Required details include the beneﬁcial owner's full legal name, birthdate, home address, and an idenﬁcaon number from an oﬃcial ID like a driver’s license or passport. Reporng Deadlines • Exisng Enes (formed before January 1, 2024): Must ﬁle their inial report by January 1, 2025. • New Enes (formed on or aer January 1, 2024): Must ﬁle within 30 days of formaon or registraon. Enes in areas aﬀected by Hurricane Helene may qualify for a ﬁling extension under disaster relief provisions. Penales for Non-Compliance Failure to comply with these rules can lead to substanal penales—up to $500 per day, with a maximum penalty of $10,000, and potenal imprisonment for more serious violaons. For small business owners, it’s crical to ensure compliance well before the January 1, 2025 deadline to avoid these ﬁnes. Next Steps If you believe your business falls under these new regulaons, you should gather the required informaon and prepare to ﬁle using FinCEN's Beneﬁcial Ownership Secure System (BOSS). SECURE Act 2.0 Several new provisions of the SECURE Act 2.0 are in eﬀect for 2024, creang opportunies for expanded rerement savings and potenal tax beneﬁts. These updates bring greater ﬂexibility and new consideraons for individuals nearing rerement or those looking to maximize their tax-eﬃcient rerement strategies. Here’s a breakdown of the most impacul updates and their relevance for year-end tax planning: RMD Exempon for Roth 401(k) and 403(b) Accounts: Starng this year, Roth accounts in employer-sponsored plans, including Roth 401(k)s and Roth 403(b)s, are exempt from Required Minimum Distribuons (RMDs). Previously, these accounts were subject to RMDs, unlike Roth IRAs. Now, funds can grow tax-free without mandatory withdrawals, giving you more control over rerement income and tax planning. Inﬂaon-Indexed Catch-Up Contribuons: For individuals aged 50 and older, the catch-up contribuon limit for IRAs will now adjust for inﬂaon. This change, beginning in 2024, means the addional $1,000 contribuon could increase as inﬂaon rises, enhancing the potenal for rerement savings. A separate rule for high earners using 401(k)s or 403(b)s (those making $145,000 or more) mandates that catch-up contribuons be made as Roth contribuons starng in 2026. This adjustment was inially set to begin in 2024 but has been postponed to provide more implementaon me.

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Jump to Table of Contents Page 9 of 41 Penalty-Free Emergency Withdrawals: If unexpected expenses arise, individuals can now take up to $1,000 in emergency withdrawals from rerement accounts without incurring the usual 10% penalty for early withdrawals. This opon, new for 2024, allows for one emergency withdrawal annually. If the distribuon isn’t repaid, addional penalty-free withdrawals are restricted for three years, providing a useful safety net for emergency access to funds without added penales. 529 Plan Rollover to Roth IRA: Starng in 2024, up to $35,000 of unused funds from a 529 educaon savings plan can be rolled into a Roth IRA for the beneﬁciary, subject to annual Roth IRA contribuon limits and the requirement that the 529 has been open for at least 15 years. This opon is parcularly beneﬁcial for families with remaining educaonal funds that can now be redirected for rerement purposes. Key Consideraons for Year-End Planning • Maximize Contribuons: If you haven’t reached your rerement contribuon limits for 2024, consider doing so. The inﬂaon-adjusted IRA catch-up contribuons are a valuable opportunity for those aged 50 and older. Beginning in 2025, a second er of catch-up contribuons for those age 60-63 is available. • Leverage Roth Flexibility: With RMDs removed for Roth 401(k) and 403(b) accounts, you may want to leave funds in these accounts for connued tax-free growth, oﬀering addional control over your rerement distribuon strategy. • Emergency Withdrawals: The penalty-free emergency withdrawal opon can be an advantage if unexpected needs arise, providing ﬂexibility without the typical penales on early rerement account access. • 529 Plan Rollovers: If you have unused 529 funds, this is the ﬁrst year you can consider rolling them over into a Roth IRA, a ﬂexible opon to repurpose educaonal savings for rerement. These SECURE Act 2.0 provisions oﬀer both ﬂexibility and tax-saving potenal. If any of these provisions may beneﬁt your speciﬁc situaon or you have quesons on opmizing these changes, please reach out. Bonus Depreciaon For the 2024 tax year, businesses will see further changes in claiming bonus depreciaon on new equipment and property. The Tax Cuts and Jobs Act of 2017 inially allowed a 100% deducon on qualifying purchases, but this is now phasing out. For 2024, the bonus depreciaon rate is 60%, decreasing to 40% in 2025, 20% in 2026, and fully phasing out by 2027 unless extended by new legislaon. Note that scaling back or reversing the phase-out of bonus depreciaon was a key provision in a tax measure that passed the House overwhelmingly in 2024. Nevertheless, the bill was stymied in the Senate. Restoring full bonus depreciaon might be included in post-elecon tax legislaon.

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Jump to Table of Contents Page 10 of 41 2024 60% Bonus Depreciaon Allowed 2025 40% Bonus Depreciaon Allowed 2026 20% Bonus Depreciaon Allowed Despite the phase-out, businesses can sll achieve full depreciaon in the purchase year by using the Secon 179 deducon. For 2024, Secon 179 allows immediate expensing of up to $1.22 million, with a phase-out threshold at $3.05 million in total asset purchases. These amounts are $1.25 million and $3.13 million for 2025, respecvely. However, it’s essenal to note that Secon 179 deducons cannot create or increase a tax loss, so it’s parcularly useful for proﬁtable businesses. When used together, Secon 179 applies ﬁrst, followed by bonus depreciaon on any remaining asset basis, allowing for substanal ﬁrst-year deducons and improved cash ﬂow in 2024. Residenal Clean Energy Credit The Residenal Clean Energy Credit oﬀers a 30% tax credit on eligible renewable energy investments for primary residences, including solar panels, wind turbines, geothermal heat pumps, fuel cells, and baery storage systems. This rate is eﬀecve through 2032, with a phase-down to 26% in 2033 and 22% in 2034. Here’s an overview of the main points for 2024, with updates from 2023 where applicable: • Nonrefundable with Carryforward Option: The credit remains nonrefundable, meaning it can offset your tax liability but won’t generate a refund. However, any unused credit can be carried forward to future tax years. • No Annual or Lifetime Limit (Except for Fuel Cells): As before, there is no dollar cap on the total credit a homeowner can claim, except for fuel cells, which are limited to $500 per half kilowatt of capacity. • Eligible Properties: This credit applies to a taxpayer’s primary residence (owned or rented) but is not available for second homes or homes exclusively used for business. This eligibility criterion is consistent with prior years. • Qualified Expenses and Requirements: o Eligible expenses include the cost of the clean energy system and related labor for installation. Be sure to subtract any rebates or incentives received when calculating qualifying expenses. o Specific technical requirements apply: solar water heaters must meet certification standards, geothermal heat pumps must comply with ENERGY STAR criteria, and battery storage technology must have a minimum capacity of 3 kilowatt hours to qualify. Overall, the Residential Clean Energy Credit remains a robust incentive for homeowners in 2024, with few changes from 2023. Homeowners considering renewable energy installations can still rely on this credit as a significant tax benefit, especially for larger projects that may span multiple

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Jump to Table of Contents Page 12 of 41 Head of Household $243,700 $250,500 Married Filing Separately $243,725 $250,525 Estates and Nongrantor Trusts $11,150 $11,450 Beginning of 37% Regular Tax Bracket Joint or Qualifying Surviving Spouse $731,200 $751,600 Single $609,350 $626,350 Head of Household $609,350 $626,350 Married Filing Separately $365,600 $375,800 Estates and Nongrantor Trusts $15,200 $15,650 Capital Gains & Losses Capital gains (and losses) are either short or long-term depending on how long the capital asset was held before being sold or exchanged. Long-term treatment applies whenever the holding period is more than one year. For 2018–2025, adjusted net long-term capital gains rates are no longer ed to your ordinary income brackets. Taxable Income (Projected) 2024 2025 Beginning of 15% Regular Tax Bracket Joint or Qualifying Surviving Spouse $94,050 $96,700 Single $47,025 $48,350 Head of Household $63,000 $64,750 Married Filing Separately $47,025 $48,350 Estates and Nongrantor Trusts $3,150 $3,250 Beginning of 20% Regular Tax Bracket Joint or Qualifying Surviving Spouse $583,750 $600,050 Single $518,900 $533,400 Head of Household $551,350 $566,700 Married Filing Separately $291,850 $300,000 Estates and Nongrantor Trusts $15,450 $15,900 Planning Strategies and Consideraons • The 3.8% Net Investment Income Tax could also apply. See the Net Investment Income Tax (NIIT) secon. • It’s somemes more beneﬁcial recognizing a larger gain if that gain is taxed at the long-term, rather than short-term, capital gain rate. When you sell less than your enre holdings of a security (purchased at diﬀerent mes and prices) at a gain, you should consider selling the shares that meet the long-term holding period requirement. While greater gain may be

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Jump to Table of Contents Page 13 of 41 recognized (depending on the basis in the stock), it may be more than oﬀset by the taxes saved by triggering a long-term gain. • Liquidang stock or mutual fund shares this year to produce a $3,000 loss that counters regular income can decrease your federal tax obligaon. This approach is especially beneﬁcial if you are currently in an elevated tax bracket because of unexpected gains, or if you expect to be in a lesser bracket in the upcoming years, perhaps due to rerement. If you (or your spouse, in the case of a joint ﬁling) had taxable earnings within the year, the saved tax funds might be channeled into a tradional IRA (which could be tax-deducble) or a Roth IRA, helping defer or eliminate potenal taxes. • Another strategy for maximizing tax beneﬁts is to recognize losses in a porolio even when you want to connue to hold the stock (usually because you expect it to appreciate). You can sell the stock at a loss and reinvest the proceeds in the same stock. Provided the wash sale rules are avoided, you obtain the current beneﬁt of a tax loss without changing your economic posion. • Even if the loss cannot be deducted fully in the current year (due to the $3,000 limit on oﬀseng ordinary income) it can be carried forward indeﬁnitely to oﬀset future gains. • Defer real estate capital gains tax using like-kind exchanges, also known as 1031 exchanges. While you were formerly able to use this strategy for various types of property, now it's limited to real estate. So if you're selling a piece of real estate and plan to invest in another one, you can use a like-kind exchange to postpone paying capital gains tax on the proﬁt you made from the sale. Just make sure to follow all the rules and melines to qualify for this tax deferral because the technical requirements are unforgiving. • Exclude up to $250,000 of gain from the sale of your primary residence ($500,000 for married ﬁling jointly), provided you've lived there for at least 2 of the past 5 years. If you don't meet this requirement due to speciﬁc reasons like job changes or health issues, you might sll qualify for a paral exclusion. o Above the exclusion is subject to capital gains tax. Don't forget to account for home improvements, as these can increase your home's basis and potenally reduce your taxable gain. • Consider whether gains should be deferred using a qualiﬁed opportunity zone investment. Net Investment Income Tax (NIIT) The NIIT is a 3.8% tax on certain types of net investment income of individuals, estates, and trusts that have income surpassing statutory threshold amounts. Individuals will owe the tax if they have Net Investment Income and also have modiﬁed adjusted gross income over the following thresholds: To avoid the wash sale rules, make sure there are no purchases of idencal stock within the period beginning 30 days before and ending 30 days aer the sale.

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Jump to Table of Contents Page 14 of 41 Modified Adjusted Gross Income(MAGI)* (Projected) 2024 2025 Joint or Qualifying Surviving Spouse $250,000 $250,000 Single $200,000 $200,000 Head of Household $200,000 $200,000 Married Filing Separately $125,000 $125,000 Estates & Trusts** See Note** See Note** MAGI*: MAGI starts with your Adjusted Gross Income(AGI) - which is your total income minus certain deducons like student loan interest, contribuons to a tradional IRA, and some others. Note**: For trusts and estates, the 3.8% Net Investment Income Tax applies to the smaller of two amounts: 1) The undistributed net investment income of the trust or estate, or 2) the amount by which the trust or estate's adjusted gross income (AGI) goes beyond the starng point of the highest tax bracket for trusts and estates, which are diﬀerent from the tax brackets for an individual. Planning Strategies and Consideraons • Realize Capital Losses: If you ancipate having substanal capital gains, consider realizing capital losses to oﬀset these gains. This can eﬀecvely reduce your net investment income for NIIT purposes. • Time Your Income: Postpone or accelerate income or deducons to either stay below the threshold or take advantage of a year when you might not be subject to the tax. • Consider Tax-Exempt Investments: Interest from tax-exempt bonds isn't considered investment income for NIIT purposes. Reallocang some of your porolio into these might reduce your exposure to the NIIT. • Rental Real Estate: If you have income from renng properes, consider acvely parcipang in the rental acvity. Acve parcipaon or qualifying as a real estate professional could make the income non-passive and thus not subject to NIIT. "Acve parcipaon" in real estate refers to a taxpayer's involvement in managing rental properes they own. The rules for acve parcipaon are relavely lenient. Generally, you are an acve parcipant if you are involved in management decisions such as approving new tenants, deciding on rental terms and approving expenditures. • Limit Passive Income: If possible, ensure that your parcipaon in business acvies avoids the classiﬁcaon of "passive," making the income from those acvies exempt from NIIT. More on this in the Passive Income & Passive Losses secon. • Opmize Investment Expenses: Certain investment-related expenses are deducble against net investment income. Review your porolio to ensure you're taking advantage of any available deducons.

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Jump to Table of Contents Page 16 of 41 Planning Strategies and Consideraons • Increase Parcipaon: By increasing your parcipaon in an acvity to more than 500 hours within the tax year, you can meet the material parcipaon test. Alternavely, if no one else parcipates more than you, and you have over 100 hours, or if you cumulavely parcipate more than 500 hours across all signiﬁcant parcipaon acvies, you can sasfy the criteria. • Grouping: Grouping acvies is a nuanced tax strategy where two or more acvies are treated as one for tax purposes, oen ulized to oﬀset passive losses from one acvity with the income from another. To be eligible for grouping, acvies should form an "appropriate economic unit," taking into account factors like business similaries and shared resources. • Consider Selling: If you sell your enre interest in a passive acvity in a fully taxable transacon, losses from that year (plus any carried over from previous years) above any net Did you parcipate more than 500 hours in day to day operaons? Did you do substanally all the work in the acvity? Did you parcipate more than 100 hours and more than anyone else? Did you parcipate more than 100 hours, but not more than 500 hours in two or more acvies so that the total parcipaon is more than 500 hours? Did you materially parcipate in this acvity for any 5 of the last 10 years? If this is a personal service acvity, did you materially parcipate for any 3 years before this year? Did you have any other facts or circumstances which indicate material parcipaon? You are not a material parcipant in the acvity. No No No No No No No No You are a material parcipant. Yes Yes Yes Yes Yes Yes Yes

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Jump to Table of Contents Page 17 of 41 income or gain from all other passive acvies for that tax year, can be considered nonpassive losses. However, note that suspended passive acvity credits remain suspended even aer the acvity that produced them is sold. As a choice, you can increase the property's basis by the unused credits' amount. • Beneﬁts for Real Estate Professionals: Real estate professionals who materially parcipate in their rental real estate acvies have the advantage of treang losses and credits from these acvies as nonpassive. This can be especially beneﬁcial as it allows these losses to oﬀset nonpassive acvity income. For a rental real estate professional, the diﬀerence between acve and material parcipaon is crical. Acve parcipaon means you're involved in making key decisions, like approving tenants or handling lease terms, and you must own at least a 10% interest in the property. This allows for a loss deducon of up to $25,000, subject to income limitaons. On the other hand, material parcipaon means you're heavily involved in the rental acvity, meeng speciﬁc IRS tests such as working over 500 hours in the year on the rental or being the primary person handling the rental operaons. This level of involvement allows you to deduct rental losses without the limitaons that apply to acve parcipaon. In short, material parcipaon provides more tax beneﬁts but requires a more substanal me commitment and involvement. Cryptocurrency Given the increasing prominence of cryptocurrencies and the IRS’s growing aenon to these transacons, understanding the tax implicaons is crucial. Virtual currency, such as Bitcoin, serves various purposes: from paying for goods/services to being held as an investment. While some see it as a digital equivalent to real currency, it's crucial to note that virtual currencies don't have legal tender status anywhere. Taxable Transacons • Selling crypto for government-issued currency. For instance, selling Bitcoin for U.S. dollars. • Crypto-to-crypto trades, like trading Bitcoin for Ethereum. • Using crypto for purchases or payments. If you used Bitcoin to buy a laptop or pay for a service, that's a taxable event. • Receiving cryptocurrencies from acvies such as blockchain "hard forks," mining, or staking. Nontaxable Transacons • Purchasing crypto with currency issued by a government or central bank. • Receiving a bona ﬁde gi of crypto (unl the crypto is sold or exchanged), or giving a bona ﬁde gi of crypto (unless the gi is large enough that the transfer is reportable for gi tax purposes). • Making a charitable donaon using cryptocurrency. • Moving crypto from one digital wallet to another digital wallet, whether the wallet is online or oﬄine.

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Jump to Table of Contents Page 18 of 41 Staking Cryptocurrency If you stake a cryptocurrency on a proof-of-stake blockchain and receive addional crypto units as validaon rewards, the FMV of these rewards is taxable. The FMV is determined when you have full control over these units, which usually means when you can sell or transfer them. Basis and Tracking Virtual Currency Your basis in virtual currency is its Fair Market Value (FMV) when received. Once purchased, cryptocurrencies are stored in a digital "wallet." For clarity in tracking the basis and idenfying sold units, it's best to maintain separate wallets. While the Highest In, First Out (HIFO) accounng method can minimize current tax costs, the IRS defaults to the First In, First Out (FIFO) method if no detailed records are maintained. See the Addional Resources secon for links to some commonly used crypto tracking/tax soware. Planning Strategies and Consideraons • Loss Harvesng and Absence of Wash Sale Rules: If you hold cryptocurrency that has declined in value, consider selling it to realize the loss, which can oﬀset other capital gains. Unlike tradional securies, wash sale rules currently do not apply to cryptocurrencies. This means you can repurchase the same cryptocurrency immediately aer selling at a loss, allowing you to maintain your posion while also capturing a tax beneﬁt. • Charitable Contribuons: Donate cryptocurrency to charitable enes. Donaons exceeding $5,000 require a qualiﬁed appraisal. • Reporng Requirements: o Form 8938: Required if assets in a foreign account exceed $50,000. o FBAR: Required for crypto owners with over $10,000 in foreign ﬁnancial accounts, including accounts with cryptocurrency exchanges. Alternave Minimum Tax (AMT) The Alternave Minimum Tax (AMT) was designed to ensure that high-income taxpayers pay a minimum amount of tax, even if they have substanal regular tax deducons. The AMT accomplishes this by adding back certain deducons and then applying an AMT rate to the AMT taxable income. How It's Calculated AMT starts with regular taxable income and then is adjusted for speciﬁed preference items and exclusions. This process oen involves adding back several deducons, such as those for state and local taxes. Once AMT income is determined, a speciﬁc AMT exempon is subtracted. However, this exempon is subject to phase-out for higher income levels, reducing the exempon amount as income rises. The remaining amount aer exempon is then taxed at AMT-speciﬁc

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Jump to Table of Contents Page 20 of 41 2024 (Projected) 2025 Joint or Qualifying Surviving Spouse $29,200 $30,000 Single $14,600 $15,000 Head of Household $21,900 $22,500 Married Filing Separately $14,600 $15,000 Itemized Deducons Itemized deducons are speciﬁc expenses allowed by the IRS that can be subtracted from your adjusted gross income to lower your taxable income and, consequently, your tax liability. Common itemized deducons include medical expenses, state and local taxes, mortgage interest, and charitable contribuons. By carefully reviewing your expenditures for the year and gathering necessary documentaon, we can maximize these deducons and work together to opmize your ﬁnancial posion. Planning Strategies and Consideraons • Medical Expenses: If possible, bunch elecve medical procedures into a single year to exceed the threshold. Also, remember to account for medical mileage, prescripon costs, and insurance premiums not paid with pre-tax dollars. • State and local taxes: Be cauous when prepaying property taxes; ensure they're assessed. Consider the ming of state esmated tax payments, but be mindful of the $10,000 cap. The maximum amount you can deduct for state and local income, sales, and property taxes combined is $10,000 ($5,000 if you're married ﬁling separately). This means if your total state and local taxes are above $10,000, you won't be able to deduct the amount that exceeds this limit. • Mortgage Interest: You can only deduct interest on the ﬁrst $750,000 of indebtedness for mortgages taken out aer Dec 15, 2017. Earlier loans have a $1 million limit. Home equity loan interest is deducble only if the loan is used to buy, build, or improve the taxpayer's home. If reﬁnancing, ensure total mortgage debt remains below the cap for interest deducbility. Also, ensure home equity debt is used for home improvements to be deducble. • Charitable giving: See next topic for a more detailed discussion. • Personal casualty and the losses: Maintain comprehensive records of property and its value. If you incur a loss in a federally declared disaster, meculously document damages, insurance recoveries, and any associated claims. Note: If you are at least age 65 or blind, you can claim an addional standard deducon of $1,950 in 2024 and $2,000 in 2025. If you are both 65 and blind, the amount is doubled.

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Jump to Table of Contents Page 21 of 41 Charitable Giving Carefully planned and executed charitable donaons can provide signiﬁcant tax advantages while furthering the causes that maer most to you. The Tax Cuts and Jobs Act (TCJA) of 2017 increased the Adjusted Gross Income (AGI) limit for deducng cash contribuons to 60% for years 2018-2025. However, to ulize these deducons, you must itemize, which, given the increased standard deducon under TCJA, might not always be beneﬁcial or even aainable. Planning Strategies and Consideraons • Donang Appreciated Long-Term Capital Gain Property: If you have appreciated long-term capital gain property, donang it directly to a qualiﬁed charitable organizaon can be more advantageous than selling and then donang the net proceeds. This strategy allows you to bypass capital gains tax and, at the same me, get a deducon for the full fair market value (FMV) of the property. • When Stocks Decline in Value: For stocks that have decreased in value, consider selling them to recognize a capital loss and then donang the sale proceeds to charity. • Cash donaons are deducble in the year they are made: This includes contribuons made via check, delivered or mailed before year-end, and those charged to a credit card—even if the credit card payment is deferred to the next year. However, note that the interest on any credit card balance is not deducble as a charitable contribuon. • Valuaon and Appraisal: For donaons exceeding $5,000 in value (excluding cash or publicly traded securies), a qualiﬁed appraisal is required. This ensures that your deducon is well-supported and reduces potenal IRS challenges. Timing of the appraisal is crical as well. • Waing for long-term treatment: If considering a donaon of appreciated short-term capital gain property, wait unl it qualiﬁes as long-term to maximize the deducon. • Use the "bunching" technique: Combine itemized deducons in one year and take the standard deducon in the next, enhancing overall deducons over me. • Donor-Advised Funds (DAFs): DAFs can oﬀer a unique opportunity for charitable contribuons. By contribung appreciated securies to a DAF, you can obtain an immediate tax deducon and then direct the fund to disburse cash contribuons to charies of your choice at a later date. • Charitable Organizaons: Ensure that the charity is recognized by the IRS to ensure the deducbility of your gi. Check the IRS Tax Exempt Organizaon Search to verify an organizaon's status here. • Qualiﬁed Charitable Distribuons (QCDs) from IRAs: You can make donaons directly from your IRA. See the Required Minimum Distribuons secon. Child Tax Credit (CTC) Next, you'll ﬁnd a concise guide and a chart summarizing credit amounts and phase-out thresholds.

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Jump to Table of Contents Page 22 of 41 Credit Details Years 2018-2025 (excluding 2021) Post-2025 CTC Amount(Per Qualifying Child) $2,000 $1,000 Refundable Portion of CTC $1,700 $1,000 Earned Income Threshold $2,500 $3,000 Other Dependent Credit(ODC) $500(Non-refundable) N/A AGI Phase-Out Start $400,000(Joint) See Below* $200,000(Others) *Post-2025 AGI Phase-Out Thresholds: $110,000(Joint), $75,000(Single, Head-of-Household, Qualifying Widow(er)), and $55,000 (Married Filing Separate). Planning Strategies and Consideraons • Adjust Wage Withholding: Given the enhanced CTC, consider revising wage withholdings via Form W-4 if you ancipate a reduced tax due. • Qualifying Child Criteria: Your child must be under the age of 17 at the end of the tax year and meet speciﬁc requirements to be a "qualifying child" for CTC. • Refundable Credit: A refundable credit means if the CTC exceeds your tax liability, you can get a refund. The maximum refundable amount is $1,700 per qualifying child with a $2,500 earned income threshold. • Dependent Credits: Apart from the CTC, there's a $500 non-refundable credit for each dependent not qualifying under CTC rules, like older children or elderly parents. This "Other Dependent Credit" or "family credit" requires a taxpayer idenﬁcaon number. • Importance of Social Security Numbers (SSN): Ensure you have an SSN for each qualifying child when claiming the CTC. If they do not have an SSN, you can claim the $500 ODC using an Individual Taxpayer Idenﬁcaon Number(ITIN) or Adopon Taxpayer Idenﬁcaon Number(ATIN). RETIREMENT Tradional & Roth IRAs Individual Rerement Accounts (IRAs) are pivotal tools for rerement savings. The Tradional and Roth IRAs, while oﬀering diﬀerent tax advantages, come with speciﬁc contribuon and income limits. This secon highlights these limits and strategies to leverage both IRA types eﬀecvely.

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Jump to Table of Contents Page 23 of 41 2024 2025 IRA Contribution Limit (Traditional and Roth) $7,000 $7,000 Catch-up contribution (age 50 or older) $1,000 $1,000 MAGI(Phaseout Range) - Traditional IRA Joint $123,000-$143,000 $126,000-$146,000 Joint (spouse not a plan participant) $230,000-$240,000 $236,000-$246,000 Single $77,000-$87,000 $79,000-$89,000 Head of Household $77,000-$87,000 $79,000-$89,000 Married Filing Separately $0-$10,000 $0-$10,000 MAGI(Phaseout Range) - Roth IRA Joint $230,000-$240,000 $236,000-$246,000 Single $146,000-$161,000 $150,000-$165,000 Head of Household $146,000-$161,000 $150,000-$165,000 Married Filing Separately $0-$10,000 $0-$10,000 Planning Strategies and Consideraons Traditional IRA • Contribute if you expect to be in a lower tax bracket in rerement. • Consider conversions to Roth IRA in years of lower income. • Ensure you take Required minimum distribuons (RMDs) to avoid hey penales. RMDs are the minimum amounts you must withdraw from your rerement accounts each year. You generally must start taking withdrawals from your tradional IRA, SEP IRA, SIMPLE IRA, and rerement plan accounts when you reach age 73. For those turning 73 in 2024, the ﬁrst RMD must be taken by April 1, 2025, with subsequent RMDs required by December 31 each year. Roth IRA • Contribute if you expect to be in a higher tax bracket in rerement or if you appreciate the ﬂexibility of no RMDs. • High earners, who are directly ineligible, can contribute to a Tradional IRA and convert to a Roth. • Consider withdrawing from taxable and tax-deferred accounts before Roth to leverage its tax-free growth potenal. • RMDs do not apply to Roth accounts unless they are inherited.

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Jump to Table of Contents Page 24 of 41 Other Consideraons • Consider making contribuons early in the year to maximize growth potenal. • Be aware of the income limits for direct contribuons to Roth IRAs and for deducbility of Tradional IRA contribuons. • If you’re age 50 or older, take advantage of "catch-up" contribuons. • Having both Tradional and Roth IRAs can provide tax diversiﬁcaon in rerement, allowing ﬂexibility in managing taxable income. • Roth IRAs can be advantageous for heirs, as they inherit the assets tax-free. • Early withdrawal penalty. o Tradional IRA: A 10% penalty applies to amounts withdrawn before age 59½, in addion to the regular income tax, unless speciﬁc excepons apply. o Roth IRA: A 10% penalty on earnings withdrawn before age 59½ and before the account is ﬁve years old. Contribuons (but not earnings) can typically be withdrawn tax and penalty-free at any me. SIMPLE IRA The Savings Incenve Match Plan for Employees (SIMPLE) IRA is a rerement savings plan primarily intended for small businesses and their employees. However, as an individual contributor, it's important to understand the tax implicaons, limits, and potenal penales associated with this savings vehicle. 2024 2025 Contribution Limit $16,000 $16,500 Catch-up contribution(age 50 or older) $3,500 $3,500 *Starting in 2025: Ages 60 to 63 N/A Greater of $5,000 or 150% of age 50 catch-up limit($5,250) Planning Strategies and Consideraons • Unlike Roth IRAs, which have income limits determining eligibility for contribuons, the SIMPLE IRA does not set explicit income caps for individual contributors. However, eligibility to parcipate in a SIMPLE IRA typically depends on the employer's established criteria, which Note: Some 401(k) plans now have a Roth opon. Roth 401(k) rules diﬀer from the rules in this secon.

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Jump to Table of Contents Page 25 of 41 might include factors like having received at least a certain amount in compensaon during the year. • Early withdrawal penalty: o General Penalty: Distribuons from a SIMPLE IRA before the age of 59½ are generally subject to ordinary income tax, plus a 10% early withdrawal penalty. o Special Rule: If you withdraw funds from a SIMPLE IRA within the ﬁrst 2 years of parcipaon, the early withdrawal penalty increases to 25%. SEP IRA Another valuable rerement tool to consider is the Simpliﬁed Employee Pension (SEP) IRA. SEP IRA Contribution Criteria 2024 Limit (Projected) 2025 Maximum % of Compensation 25% 25% Maximum Dollar Amount $69,000 $70,000 Note: Contribuons to SEP-IRAs and SIMPLE-IRAs do not count against your annual limit for Tradional and Roth IRAs. Planning Strategies and Consideraons • Double Contribuon Opportunity: If you are 50 or older, with suﬃcient earnings, you can contribute $8,000 to a Tradional or Roth IRA for 2024, even if the maximum is contributed to a SEP or SIMPLE IRA on your behalf. • New Rerement Plan Tax Credit: If you're a small employer starng a new rerement plan, you may qualify for a non-refundable income tax credit covering up to 100% of administrave costs, capped at $5,000 per year for the ﬁrst three years. The SECURE 2.0 Act of 2022 also introduced an addional credit for employer contribuons—up to $1,000 per employee, phased out over ﬁve years. These incenves aim to ease the costs of both establishing and contribung to employee rerement plans. • Roth Contribuon Opon: The SECURE 2.0 Act allows employers to oﬀer employees the opon to treat SEP and SIMPLE IRA contribuons as Roth (aer-tax) contribuons. This applies to both employee and employer contribuons, providing more ﬂexibility for aer-tax rerement savings. • Choosing Between SIMPLE IRA and SEP: The ideal choice between a SIMPLE IRA and a SEP varies based on each employer's situaon. However, for business owners with few employees and relavely lower income, a SIMPLE IRA might be advantageous. Conversely, both SEP and SIMPLE IRAs allow employees immediate access to their funds, which might dissuade some employers.

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Jump to Table of Contents Page 26 of 41 401(k) The 401(k) plan is one of the most popular rerement savings vehicles for employees working in the United States. It oﬀers tax-deferred growth on contribuons, potenal employer matching, and a range of investment opons. 2024 2025 Contribution Limit $23,000 $23,500 Catch-up contribution(age 50 or older) $7,500 $7,500 *Starting in 2025: Ages 60 to 63 N/A Greater of $10,000 or 150% of age 50 catch-up limit($11,250) Planning Strategies and Consideraons • For contribuons made aer December 29, 2022, a 401(k) plan may allow a parcipant to designate some or all matching and nonelecve contribuons as designated Roth contribuons. This applies to the extent the employee is fully vested in the contribuons. Any such matching contribuons will be included in the employee’s wage income for the year. • For plan years beginning aer December 31, 2023, the SECURE 2.0 Act requires catch-up contribuons for high-wage taxpayers to be made to a Roth 401(k). This rule applies to individuals who, for the preceding calendar year, had wages in excess of $145,000 (2023 wages for the 2024 plan year). However, the IRS announced a two-year transion period and will treat catch-up contribuons in 2024 and 2025 as sasfying the provisions of the law, even if the contribuons are not designated Roth contribuons. • Unlike some rerement savings vehicles, the 401(k) does not have income limits that directly aﬀect contribuon eligibility. However, in cases where the plan is considered "top-heavy" (primarily beneﬁng higher-paid employees), certain restricons might apply to highly compensated employees. It's essenal to consult your employer or plan administrator if you believe this could apply to you. 403(b) The 403(b) plan is generally available to employees of public schools, certain non-proﬁts, and some churches, oﬀering exclusive opportunies to save for rerement while enjoying tax beneﬁts. 2024 (Projected) 2025 Contribution Limit $23,000 $23,500 Catch-up contribution(age 50 or older) $7,500 $7,500

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Jump to Table of Contents Page 27 of 41 Note: Employees with at least 15 years of service may be eligible to make addional contribuons to a 403(b) plan in addion to the regular catch-up for parcipants who are age 50 or over. Planning Strategies and Consideraons • The SECURE Act 2.0 of 2022 brought forth several changes for 403(b) plans mirroring the rules for 401(k) plans. Some key changes are listed below: o Conformity of hardship distribuon rules with 401(k) plans. o For speciﬁc employees, age 50 catch-up contribuons will be mandated on a Roth basis starng in 2024. o Both 403(b) and 401(k) plans can now join mulple employer and pooled employer plans. Required Minimum Distribuons (RMDs) The beginning age for taking required minimum distribuons (RMDs) has increased for owners of tradional IRAs, 401(k)s and other workplace rerement plans. This applies to account owners who turn 73 in 2024 or later. If you turn 73 in 2024, you must take your ﬁrst RMD by April 1, 2025. People who work past age 73 can generally delay taking RMDs from their current employer’s 401(k) unl they rere. There is a penalty for people who fail to take their RMD, but that penalty is lower than in past years. Starng in 2023, the excise tax for such failures is 25% of the missed RMD amount, which is down from 50%. Addionally, the penalty goes down to 10% for failures that are corrected in a mely manner. Tradional IRAs, SEP IRAs, SIMPLE IRAs, and employer-sponsored plans like 401(k)s are subject to RMD rules. The below chart will help you determine your required beginning date(RBD) for sasfying the RMD rules: Date of Birth Age of RBD January 1, 1951 - December 31, 1959 73 January 1, 1960, and thereafter 75 Planning Strategies and Consideraons • Delaying the Start: The ﬁrst RMD can be delayed unl April 1st of the year aer you turn 73. However, this means you'll have to take two distribuons in that year, which can increase taxable income for the year, so oen it makes sense to take your RMD in the same year as your RBD age.

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Jump to Table of Contents Page 28 of 41 • Accelerang Income: For taxpayers who are moved into higher tax brackets because of RMDs, the delay in RMDs based on the later ages in SECURE 2.0, will allow taxpayers to beneﬁt from accelerang income into more years not requiring RMDs when taxes can be paid at lower tax rates. • Roth Conversions: Consider converng tradional IRA funds to a Roth IRA. While the conversion is taxable, Roth IRAs are not subject to RMDs, and qualiﬁed distribuons are tax-free. • Tax Eﬃciency in Withdrawals: When considering withdrawals beyond RMDs, evaluate the tax implicaons of pulling funds from taxable, tax-deferred, and tax-free accounts to opmize tax eﬃciency. • Ulize QCDs: If charitable giving aligns with your goals, use QCDs to meet RMD amounts. This strategy can reduce taxable income and simultaneously beneﬁt the chosen charity. These distribuons are made directly to charies from your IRAs, and the amount of the contribuon is neither included in your gross income nor deducble on Schedule A, Form 1040. However, you are sll entled to claim the enre standard deducon. • Beneﬁciaries: Ensure that beneﬁciary designaons are up to date on all rerement accounts, and be aware of the post-death RMD rules which can vary based on the type of beneﬁciary (spouse, non-spouse, enty, or no beneﬁciary). Qualiﬁed Charitable Distribuons (QCDs) • QCDs are direct transfers of funds from an IRA, payable to a qualiﬁed charity, totaling any poron of or up to $105,000 in 2024 annually. This amount increases to $108,000 in 2025. • Only available for owners and beneﬁciaries age 70½ or older. • QCDs can total more than your RMD. Social Security Taxaon of Social Security Beneﬁts • Provisional Income: o To determine if Social Security beneﬁts are taxable, one must calculate their "provisional income." This includes half of your Social Security beneﬁts plus other income (including tax-exempt interest). • Tax Thresholds: o Single, Head of Household, or Qualifying Widow(er): Beneﬁts may be taxable if provisional income is over $25,000. o Married Filing Jointly: Beneﬁts may be taxable if provisional income is over $32,000. o Married Filing Separately and lived apart from your spouse all year: Beneﬁts may be taxable if provisional income is over $25,000.

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Jump to Table of Contents Page 29 of 41 Planning Strategies and Consideraons • You can start receiving social security rerement beneﬁts at age 62. However, the full beneﬁt will be permanently reduced for each month before you reach the FRA(Full Rerement Age). Therefore, the monthly beneﬁts at age 62 will be less than the beneﬁts would have been at the FRA. The reducon in beneﬁts is permanent and can aﬀect your spouse’s beneﬁts at your death as well. • If you choose to work past your FRA and choose to delay receiving beneﬁts while working, the beneﬁts paid later will be higher because of three consideraons: (a) the addional years of earnings, hopefully replacing lower earnings during the 35-year calculaon period; (b) increases in the indexing amounts used to calculate the primary insurance amount (PIA); and (c) the delayed rerement credit. • Even if rerement is delayed, you should sign up for Medicare at age 65. In some circumstances, medical insurance costs more if you delay applying for it. • In addion to evaluang the best me to begin receiving social security beneﬁts, you should consider several issues when evaluang the early rerement decisions: o The Consumer Financial Protecon Bureau oﬀers a social security claiming tool to help workers decide the best age for them to start receiving rerement beneﬁts here. DEPENDENTS & EDUCATION Student Loan Interest You may deduct the lesser of $2,500 or the actual amount of interest you paid on a qualiﬁed student loan during the year. This is an "above-the-line" deducon, meaning it reduces your adjusted gross income (AGI) and is available even if you do not itemize deducons on your tax return. To qualify for the deducon • The loan must have been taken out solely to pay for qualiﬁed educaon expenses for you, your spouse, or someone who was your dependent at the me the loan was obtained. • The loan cannot be from a related person or made under a qualiﬁed employer plan. 2024 (Projected) 2025 Deduction $2,500 $2,500 MAGI(Phaseout Range) Joint $165,000-$195,000 $170,000-$200,000 Single $80,000-$95,000 $85,000-$100,000 Head of Household $80,000-$95,000 $85,000-$100,000 Married Filing Separately $80,000-$95,000 $85,000-$100,000

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Jump to Table of Contents Page 30 of 41 • The student must have been enrolled at least half-me in a program leading to a degree, cerﬁcate, or other recognized credenal. • The expenses must have been incurred within a reasonable period before or aer the loan was taken out. Kiddie Tax The "Kiddie Tax" is designed to prevent high-income taxpayers from shiing income to their children to take advantage of the children's lower tax rates. Essenally, it taxes a poron of a child's unearned income (from sources like interest, dividends, and capital gains) at the parent's tax rate rather than the child's oen lower rate. Who is Aﬀected? The Kiddie Tax applies to: • Children under 18 at the end of the year. • Children who are 18 at the end of the year, but their earned income does not exceed half of their annual support. • Full-me students between the ages of 19 and 23 at the end of the year if their earned income does not exceed half of their support. How is the Tax Calculated? • First, the child's earned income (e.g., from a job or self-employment) is taxed at the child's standard tax rate. • A small poron of the child's unearned income is tax-free ($1,300 for 2024, see chart below). • The next segment of the child's unearned income ($1,300 for 2024, see chart below) is taxed at the child's tax rate. • Any remaining unearned income beyond that is taxed at the parents' marginal tax rate. 2024 (Projected) 2025 Tax-free unearned income $1,300 $1,350 Next level taxed at child's tax rate $1,300 $1,350 $2,600 $2,700 Note: A parent will be able to elect to include a child's income on the parent's return for 2024 if the child's gross unearned income is more than $1,300 and less than $13,000($1,350 and $13,500 in 2025).

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Jump to Table of Contents Page 31 of 41 Planning Strategies and Consideraons • Shiing Income: Instead of giing assets that produce unearned income, consider giing assets that appreciate in value but do not produce current taxable income. For example, stock that does not pay dividends. • Educaonal Savings: Use tax-advantaged educaonal savings accounts, like 529 plans or Coverdell Educaon Savings Accounts. Income earned within these accounts is not subject to the Kiddie Tax. They also grow tax-free if the funds are used for a qualifying expense. • Roth IRAs for Working Kids: If the child has earned income, consider contribung to a Roth IRA on their behalf. While there's no current deducon, the money will grow tax-free for the child's future needs. • Age Consideraons: If possible, consider delaying large gis unl the child is no longer subject to the Kiddie Tax (e.g., aer age 23 if not a full-me student or when they have enough earned income to provide over half of their support). • Evaluate Your Tax Bracket: If you are in a low tax bracket, the impact of the Kiddie Tax might be minimal. Conversely, if you are in a high tax bracket, more planning might be necessary. Employing Family Members Leveraging family employment can be an eﬀecve strategy for tax planning, but it's crucial to understand the rules surrounding this approach. Understanding Family Employment Rules Family businesses oen employ parents, children, and even grandchildren. The IRS generally treats such employment like any other, meaning family members' wages are subject to federal income tax withholding (FITW), social security and Medicare (FICA) taxes, and federal unemployment (FUTA) tax. However, certain exempons may apply for FICA or FUTA taxes, even though FITW sll applies. Note: The deﬁnion of a family member, for these rules, encompasses spouses, children (which includes adopted, foster, and stepchildren), and ancestors. Tax Beneﬁts of Employing Your Children Employing your child in your closely held business can lead to signiﬁcant tax beneﬁts. For instance, in 2024, a child could earn up to $21,600 without paying any income taxes. This can be broken down into a standard deducon of $14,600 and an IRA deducble contribuon of $7,000. By paying wages to a child, you can shi income to their lower tax bracket and reduce the overall family tax burden, including FICA taxes. Addionally, doing so may help dodge the "kiddie tax" for children under 18 or those between 19 to 23 if they are students and provide over half of their own support with earned income. Be cauous, though; the IRS pays close aenon to ensure the wages are jusﬁable and earned.

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Jump to Table of Contents Page 32 of 41 Tax Implicaons Based on Business Type Sole Proprietorship: If your family business operates as a sole proprietorship, there are instances where a family member's wages can be exempt from certain taxes: • Children under 18 employed by a parent are FICA-exempt. For FUTA, the age limit is under 21. • A spouse's employment is exempt from FUTA but is subject to FITW and FICA. • A parent employed by their child is FICA-exempt. However, both FITW and FICA apply in all other cases. Corporaons (C or S Corporaon): If your business operates as a C or S corporaon, all family members' wages are subject to FITW, FICA, and FUTA without any exempons, regardless of age or relaonship. Partnership If your business is a partnership, every family member's wages are subject to FICA and FUTA unless the son or daughter exempon applies and only the parents are partners. Educaon It's essenal to explore avenues that opmize the ﬁnancial landscape for your college-bound children or for those already in college. Coverdell and 529 plans, among other opons, present viable tax advantages. Planning Strategies and Consideraons Planning for College Expenses • 529 Plans: Contribuons aren’t deducble, but they grow tax-free unl used. However, any non-qualiﬁed distribuons can aract a tax plus a 10% penalty. Note that up to $10,000 per year can be used for elementary or secondary schooling, including private schools. o New rules now allow tax-free rollovers from 529 accounts to Roth IRAs, subject to speciﬁc condions.  Lifeme 529 rollover limit: $35,000  Roth IRA must have the same beneﬁciary as the 529 plan  529 account eligibility: 15+ years old  No rollover for contribuons made in the last ﬁve years  Rollovers adhere to Roth IRA annual limits • Coverdell ESAs: An annual contribuon limit of $2,000 applies for each child under 18 (except beneﬁciaries with special needs.) While contribuons aren’t deducble, distribuons for qualiﬁed educaon expenses are tax-free.

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Jump to Table of Contents Page 33 of 41 • Transferring Ownership to Children: Two parents can transfer up to $36,000 in assets or cash to each child this year and avoid gi tax. However, if it’s a joint gi, a return ﬁling may sll be required. If the "kiddie tax" does not apply, the child's tax rate on income could be as low as 10%. However, beware of situaons where the kiddie tax applies; your child's investment income might be taxed at your higher rate. • Tax-Exempt Bonds: Invesng in tax-exempt bonds, such as college savings bonds and “stripped” municipal bonds, can oﬀer a tax-eﬃcient growth strategy. Paying College Expenses • Tuion Tax Credits: The American Opportunity tax credit (AOTC) and Lifeme Learning credit can provide tax relief. The AOTC, oﬀering up to $2,500 per student for the ﬁrst four college years, is 40% refundable. • Scholarships: Scholarships used for qualiﬁed expenses (excluding room and board) are typically tax-free. However, they might reduce potenal tax credits. • Employer Assistance & Tuion Reducon Plans: Payments made by your employer for your child's college can be tax-free under speciﬁc condions. • Payments by Grandparents or Others: Direct payments made by others (like grandparents) to educaonal instuons for your child's tuion are exempt from the gi tax. • Borrowing Against Rerement Plans: This can be an alternave source of funds, but there are implicaons to consider, including potenal penales and taxes. • Withdrawals from Rerement Plans: Funds from IRAs and some qualiﬁed rerement plans can be ulized for educaon without incurring the 10% early withdrawal penalty, though regular distribuon income taxes will apply. MEDICAL Health Savings Account Health Savings Accounts (HSAs) are tax-advantaged savings vehicles speciﬁcally designed for individuals covered by High Deducble Health Plans (HDHPs). They oﬀer the unique beneﬁt of triple tax savings: tax-deducble contribuons, tax-free earnings, and tax-free withdrawals for qualiﬁed medical expenses. 2024 (Projected) 2025 Contribution(Self-only coverage) $4,150 $4,300 Contribution(Family coverage) $8,300 $8,550 Catch-up contribution(age 55 or older) $1,000 $1,000 Unlike many other tax-advantaged accounts, HSAs do not have speciﬁc income limits that aﬀect contribuon eligibility. Instead, the primary eligibility requirement is that the individual must be

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Jump to Table of Contents Page 34 of 41 covered by an HDHP and not be enrolled in Medicare or claimed as a dependent on someone else's tax return. Planning Strategies and Consideraons • Portability and Flexibility: HSAs are fully portable. This means that even if you change employers or leave the workforce, the HSA remains with you. Funds in the HSA can also be invested, oﬀering the potenal for growth over me, and there's no requirement to withdraw funds by a certain age, nor in a certain year. • Early withdrawal penalty, if non-medical withdrawal: o Before Age 65: The distribuon is subject to ordinary income tax and an addional 20% penalty. o Age 65 or over: The distribuon is subject to ordinary income tax but the addional 20% penalty does not apply. Essenally, aer age 65, an HSA can funcon similarly to a tradional IRA for non-medical withdrawals, though using funds for medical expenses remains tax-free. Flexible Spending Account Flexible Spending Accounts (FSAs) provide a valuable opportunity to set aside pre-tax dollars for medical expenses, but it's essenal to be mindful of contribuon limits and potenal forfeitures. 2024 (Projected) 2025 Contribution $3,200 $3,300 Max Carryover Amount $640 $660 Beneﬁts of an FSA • Contribuons made by your employer can be excluded from your gross income. • No employment or federal income taxes are deducted from your FSA contribuons. • Reimbursements from your FSA for qualiﬁed medical expenses are tax-free. • You can get reimbursements from the FSA even before you've deposited all the funds for the yea r. Planning Strategies and Consideraons • Use-it-or-Lose-it Rule: FSAs typically adhere to a use-it-or-lose-it rule. Amounts unspent by the end of the plan year are generally forfeited. However, there are two excepons: o Grace Period: Your plan may oﬀer a grace period extending up to 2 1/2 months aer the plan year ends. During this period, you can use the remaining FSA funds from the previous year for qualifying medical expenses.

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Jump to Table of Contents Page 35 of 41 o Carryover: Some plans might allow you to carry over up to $640 in 2024 (or a speciﬁed lower amount) of unspent funds into the next year. This carryover doesn't impact the maximum you can contribute for the next year. Please note that a plan can provide either the grace period or a carryover, but not both. Check with your HR department to understand which opon, if any, your FSA plan oﬀers. • You can use your FSA funds for a wide range of medical expenses, including over-the-counter medicines. Expenses can be used for: o Yourself and your spouse; all dependents you claim on your tax return; anyone you could have claimed as a dependent under speciﬁc criteria; and, your child under age 27 at the end of your tax year. o Note: Health insurance premiums, long-term care coverage or expenses, and amounts covered by another health plan are not eligible for FSA reimbursement. Long-Term Care Insurance Long-Term Care Insurance is designed to cover services that aren't covered by health insurance, Medicare, or Medicaid. These services oen include assistance with roune daily acvies such as bathing, dressing, or geng in and out of bed. Premiums paid on a tax-qualiﬁed long-term care insurance policy can be treated as medical expenses, and therefore, may be deducble based on certain age-related limits. Age 2024 2025 Over 70 $5,880 $6,020 Age 61-70 $4,710 $4,810 Age 51-60 $1,760 $1,800 Age 41-50 $880 $900 Under 41 $470 $480 Tax Advantages • Premium Deducons: Premiums paid for a qualiﬁed long-term care insurance policy can be deducble as medical expenses. However, the amount you can deduct increases with age as seen above. • Beneﬁts Received: Generally, long-term care insurance beneﬁts are not taxable as income. This is true for both per diem and reimbursable policies. • Hybrid Policies: Some life insurance policies or annuies oﬀer riders for long-term care. The beneﬁts paid out for long-term care from these hybrid policies typically aren't considered taxable income.

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Jump to Table of Contents Page 36 of 41 Planning Strategies and Consideraons • Plan Early: Premiums for long-term care insurance are based on age and health. By iniang a policy earlier in life, you might lock in a lower premium. • Inﬂaon Protecon: Consider a policy that oﬀers inﬂaon protecon. This ensures that your beneﬁt keeps pace with the rising costs of care. • State Partnerships: Many states have partnership programs that provide asset protecon if you ever need to apply for Medicaid aer using your policy beneﬁts. • Daily or Monthly Beneﬁt: Determine the amount of coverage you'll need, whether it's a daily or monthly beneﬁt. Factor in current costs in your area and any family support you might receive. GIFTS & ESTATES Gi Tax Exclusion When individuals give substanal gis to others, they might face implicaons under the U.S. federal gi tax regulaons. Understanding these rules can ensure compliance while opmizing one's tax posion. You can give up to $18,000, for 2024, to any individual recipient in a single year without incurring gi tax or even the requirement to report the gi. If you're married, you and your spouse can each give $18,000, allowing for a combined total of $36,000 to a single recipient without incurring a gi tax. However a joint gi must be disclosed on a gi tax return. 2024 2025 Annual Exclusion $18,000 $19,000 Beyond the annual exclusion, there's also a lifetime gift tax exemption: 2024 2025 Lifetime Exemption $13,610,000 $13,990,000 Planning Strategies and Consideraons • Spousal Gis: Gis between spouses are generally unlimited and free from gi tax due to the unlimited marital deducon (with certain restricons for non-cizen spouses). • Educaon and Medical Expenses: Payments made directly to educaonal instuons for tuion or to medical care providers for medical expenses on someone's behalf are excluded from the gi tax, even if they exceed the annual exclusion amount.

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Jump to Table of Contents Page 37 of 41 • Gi Spling: If you're married, consider leveraging the opon to "split" gis. This allows a couple to combine their annual exclusion amounts even if only one spouse funds the enre gi. But, you must ﬁle a gi tax return to make this elecon. • Uniﬁed Credit: The lifeme gi tax exempon is uniﬁed with the estate tax exempon. This means that gis given beyond the annual exclusion amount reduce the available exempon for estate tax purposes upon death. • 529 Plans: Contribuons to 529 educaon savings plans can be front-loaded for up to ﬁve years. This means you can make a larger contribuon (up to 5 mes the annual exclusion amount) and treat it as if it were spread over a ﬁve-year period for gi tax purposes. You must ﬁle a gi tax return to elect this. • Gis in Trust: Seng up trusts like the Crummey Trust or the Grantor Retained Annuity Trust (GRAT) can allow for more complex giing strategies that provide addional control over assets while sll leveraging gi tax exclusions and exempons. • Portability: A feature that allows a surviving spouse to ulize any unused poron of the deceased spouse's estate and gi tax exempon. If one spouse does not ulize the full $13.61 million exempon in 2024, the unused poron can be transferred to the surviving spouse, provided an elecon is made on the deceased spouse's estate tax return. This can increase the amount the surviving spouse can give tax-free during their lifeme or upon death. For this reason, it may be wise to ﬁle an estate tax return on the ﬁrst of a couple to die, even if their ﬁling is not required. Estates Since 2011, there has been a signiﬁcant increase in the estate tax exempon. Inially set at $5 million, it rose to $10 million for estates of decedents passing away starng in 2018. Adjusted for inﬂaon, the exempon stands at $13,610,000 for 2024, up from $12,920,000 in 2023. Due to this generous exempon, numerous estates will be exempt from federal estate tax. Before these changes, many estate plans were primarily aimed at avoiding estate tax and paid lile aenon to minimizing income tax. Now, with many estates exempt from estate tax, the focus has shied to saving on income taxes. Though balancing both income and transfer tax savings was a challenge when exempons were low, the large current exempon facilitates this objecve. Planning Strategies and Consideraons • Gis Using Annual Gi Tax Exclusion: While previously employed to save on estate tax, the current large exempon might render such gis less pernent for tax savings. Moreover, giing appreciated assets can present potenal income tax costs for the donee, as they assume the donor's basis, potenally leading to capital gains tax upon sale. Thus, the raonale for giing should now extend beyond merely tax consideraons. • Planning to Equalize Spouses' Estates: With the advent of "portability," there's more ﬂexibility for married couples in terms of estate tax exempons. Now, unused exclusions

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Jump to Table of Contents Page 38 of 41 from a deceased spouse can be used by the surviving spouse. This introduces more strategic opons for estate planning. • Estate Exclusion and Valuaon Discounts: Strategies that once sought to exclude property from the estate might not be as appealing now. The potenal step-up in basis at death, which eradicates the capital gains tax on the appreciaon of assets, makes certain strategies more appealing, especially given the narrowing gap between transfer tax and capital gains tax rates. • IRS Scruny and Estate Planning: The IRS occasionally requests estate planning details during audits. They might seek permission to inspect records from aorneys, banks, insurance agents, and accountants. • Standard Estate Planning Techniques: Making lifeme gis to beneﬁciaries is a common strategy. However, this isn't feasible for rerement assets. Some individuals with sizable rerement plans purchase life insurance to cover expected estate taxes. This insurance can provide liquidity for estate tax payments. Addionally, it's worth nong that some pension and proﬁt-sharing plans oﬀer life insurance. MISCELLANEOUS Online IRS Account Stay informed and manage your tax obligaons eﬃciently by seng up an online account with the IRS. This secure plaorm allows you to access your tax records, make payments, and receive important updates. Create your account here. Maintaining Tax Records Proper documentaon not only eases the tax preparaon process but also ensures you are well-equipped to address any inquiries from the IRS or other enes. Below are some key guidelines and recommendaons for eﬀecve record-keeping. IRS Rules on Tax Record Retenon • General Rule: The IRS suggests taxpayers retain their ﬁled tax returns and accompanying documentaon for at least three years from the ﬁling date or the return's due date, whichever comes later. • Underreported Income: If your reported income is understated by more than 25% of the actual gross income presented in your return, the IRS can audit for six years, thus we recommend keeping records for 7 years. • No Returns Filed: In cases where a return wasn't ﬁled, it's prudent to hold onto records indeﬁnitely. • Claim for Loss from Worthless Securies: In such situaons, retain your records for a span of seven years. • Special Consideraons: Always be mindful that the IRS guidelines serve as a foundaon, and speciﬁc scenarios like claims for tax credits or refunds may demand parcular documents.

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Jump to Table of Contents Page 39 of 41 Addionally, individual states might impose their own record retenon rules, which can somemes deviate from the federal criteria. • More comprehensive guide on record retenon here. General Recommendaons for Eﬀecve Record Keeping • Digital Records: To bolster the security and accessibility of your tax documentaon, consider maintaining digital backups. This measure oﬀers protecon against potenal physical damages. • Organized Storage: Keep your records in a systemac manner—either chronologically or categorically—to facilitate smooth retrieval when necessary. • Non-Tax Purposes: Remember, enes beyond the IRS, such as creditors or insurance ﬁrms, might necessitate longer retenon of certain ﬁnancial records. Always factor in these speciﬁcaons when determining the duraon for preserving speciﬁc records. Avoiding Scams Every year, countless taxpayers become vicms of sophiscated scams that compromise their personal informaon and ﬁnancial safety. The IRS, in its ongoing commitment to the safety of taxpayers, constantly updates and informs the public about the latest taccs employed by scammers. IRS Dirty Dozen List here. Identy Protecon PIN (IP PIN) An IP PIN is a unique six-digit number that replaces an individual's social security number on their tax return, oﬀering an added layer of protecon against identy the. Inially designed for identy the vicms, starng in 2021, any individual can opt into the IP PIN program. However, obtaining an IP PIN requires passing a stringent identy veriﬁcaon process. This protecon also extends to spouses and dependents who meet the identy veriﬁcaon criteria. We must have your IP PIN, if one has been issued, in order to e-ﬁle your tax return. To secure an IP PIN or to learn more, individuals are encouraged to use the Get an IP PIN tool online. Remember, an IP PIN is valid for only one year, necessitang annual renewal. A comprehensive guide on this topic here. Addional Resources Where’s My Refund (IRS) Tax Withholding Esmator Where’s My Refund (NC) Online IRS Payments

YETPL Individual 2024

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