Federal Tax News for Individuals: November 2023

Making Cash Gifts in 2023 and 2024

money gift

This holiday season, you may want to make cash gifts to loved ones. The annual gift tax exclusion for 2023 is $17,000 ($34,000 for married couples). You can give up to that amount to an unlimited number of people by Dec. 31, and the gifts will be exempt from gift tax, the generation-skipping tax and filing obligations. You can't "carry over" tax-exempt gifts from year to year, but there may be strategies for making larger gifts.

Suppose, for example, you and your spouse want to help your daughter buy a house, you can give her $34,000 on Dec. 31. Then on Jan. 1, you can give an equal or higher amount, when 2024's gift tax exclusion is projected to be $18,000 ($36,000 for married couples).

How Life Affects Taxes

marriage or divorce

Major life changes can greatly affect your tax situation. This is especially true if you get married or divorced. If one of these events happened to you, be sure to address it with your tax advisor as part of your year-end tax planning. Indeed, your marital status for the entire year is determined as of Dec. 31. If you're married (or divorced) as of the end of the year, the IRS will treat this as if you were married (or single) all year long. This can affect your tax filing status this year and next. Also, if you're in the process of divorcing, factor in any tax implications involved in property settlements, alimony and retirement plans. Contact us for other year-end tax considerations.

Last Chance to Minimize Your 2023 Tax Bill

tax-loss harvesting

Year-end tax planning season in here. The up-and-down financial markets this year may provide you the opportunity to harvest your losses. This tried-and-true tax strategy may be an option if you've realized adjusted net capital gains and are now facing a high tax bill as a result. To soften the tax blow, review your portfolio to see if there are any securities you can sell at a loss to offset the gains. If you end up with a net capital loss, you can use it to offset up to $3,000 in ordinary income. However, beware of the wash sale rule. It bans the deduction of a loss when you acquire "substantially identical" investments within 30 days, before or after, of the sale date.

Appointing Someone to Handle Your Tax Matters

elderly couple meeting with their accountant

If the IRS wants to talk to you about a specific tax matter, you can authorize a third-party to handle it on your behalf. But whether it's an unpaid friend or relative or a paid tax pro, you must grant them formal permission. That can take several forms, such as:

Contact us if you have questions.

2024 Social Security Figures

Social Security COLA Increase Ahead

The Social Security Administration (SSA) has announced that for 2024 the maximum earnings subject to Social Security tax will increase $8,400, from $160,200 to $168,600. The $168,600 wage base for 2024 is slightly greater than the wage base forecasted by the SSA's Office of the Chief Actuary back in April.

In addition, the SSA announced that Social Security and Supplemental Security Income benefits will increase by 3.2%. These changes reflect cost-of-living adjustments to account for inflation. On average, Social Security retirement benefits will increase by more than $50 per month starting in late Dec. or early Jan. for nearly 71 million recipients, according to the SSA.

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