{"id":5221,"date":"2023-11-21T05:10:32","date_gmt":"2023-11-21T05:10:32","guid":{"rendered":"https:\/\/magnusblue.com\/?p=5221"},"modified":"2023-11-30T09:42:03","modified_gmt":"2023-11-30T09:42:03","slug":"2024-tax-changes-and-considerations","status":"publish","type":"post","link":"https:\/\/magnusblue.com\/2024-tax-changes-and-considerations\/","title":{"rendered":"2024 Tax Changes and Considerations"},"content":{"rendered":"

For the first time in a while, it appears we have only a few changes to keep in mind as we head into the new year.\u00a0 Don\u2019t get comfortable though, it\u2019s not likely to last.\u00a0 We know for certain, several of the TCJA (Tax Cuts and Job Act of 2018) tax law changes are set to expire at the end of 2025.\u00a0 This will make long term tax planning a little challenging in the next few years, especially for potentially significant events, such as selling a business.\u00a0 For now, we\u2019ll focus on 2024.<\/span><\/p>\n

SDI Rate Changes<\/span><\/h2>\n

California employees are used to having SDI (State Disability Insurance) deducted from their paychecks.\u00a0 For 2023, the contribution rate was 0.9% on annual wages up to $153,164 (maximum contribution\/withholding of $1,378.48).\u00a0 Starting January 1, 2024, the rate increases to 1.1% with NO maximum wage base.\u00a0 This means higher compensated employees will be paying in quite a bit more than the past.\u00a0\u00a0<\/span><\/p>\n

Employers with highly compensated employees and generally low disability claims may want to consider a voluntary plan.\u00a0 Such a plan must be pre-approved by the state but may be a viable alternative to help employees keep more of their wages.\u00a0<\/span><\/p>\n

New Beneficial Ownership Reporting Requirements<\/span><\/h2>\n

(This information has been reproduced from a client letter published by Spidell.com)<\/span><\/i><\/p>\n

Starting in 2024 newly formed, corporations, limited liability companies (LLCs), limited partnerships, and other entities that file formation papers with a state\u2019s Secretary of State\u2019s office (or similar government agency) must file a report with the U.S. Treasury Department\u2019s Financial Crimes Enforcement Network (FinCEN) providing specified information regarding the entity\u2019s \u201cbeneficial owners.\u201d Entities in existence prior to January 1, 2024, must begin filing these reports on January 1, 2025.<\/span><\/p>\n

This is part of the federal government\u2019s anti-money laundering and anti-tax evasion efforts and is an attempt to look beyond shell companies that are set up to hide money. Unfortunately, this will impose burdensome reporting requirements on most businesses, and the willful failure to report information and timely update any changed information can result in significant fines of up to $500 per day until the violation is remedied, or if criminal charges are brought, fines of up to $10,000 and\/or two years imprisonment. These penalties can be imposed against the beneficial owner, the entity, and\/or the person completing the report.\u00a0<\/span><\/p>\n

Magnus Blue clients can expect a client letter with further details.<\/span><\/p>\n

CA Unclaimed Property Reporting<\/span><\/h2>\n

Have you ever heard a news headline that said something like, \u201c<\/span>Millions of dollars of unclaimed property held by the state!<\/span><\/i>\u201d This is not a new matter, but it\u2019s gaining attention again.\u00a0 California law requires organizations to review their records annually to determine if they\u2019re holding any funds or property that have been \u201cunclaimed\u201d for the required dormancy period. For small\/mid-sized businesses, transactions such as uncashed payroll checks, vendor payments, or customer deposits may be subject to these reporting requirements.\u00a0 We\u2019ve seen the state audit clients over noncompliance with some clients.\u00a0 Starting with the 2022 business tax returns, there is now a specific question as to whether or not the company had previously filed an unclaimed property Holder Remit Report with the state.\u00a0 This is low hanging fruit for the state to start targeting noncompliance.\u00a0 They will likely have an industry priority list to make its targets, but the bottom line is that now is the time to review your compliance.\u00a0<\/span><\/p>\n

In 2022, AB 2280 established a voluntary compliance program that waives interest (12% on the value of property held) for taxpayers who come into compliance.<\/span><\/p>\n

You can find more information here: <\/span>https:\/\/www.sco.ca.gov\/upd_how_to_report.html<\/span><\/a>\u00a0<\/span><\/p>\n

Bonus Depreciation:<\/span><\/h2>\n

The bonus depreciation is currently 80% for qualified assets placed in service in 2023 and drops to 60% for assets placed in service in 2024.\u00a0 Section 179 deduction is still available as well but is subject to certain limitations.<\/span><\/p>\n

Research & Experimental expenditures<\/span><\/h2>\n

Historically, research and experimental expenditures were 100% deductible when incurred and may have been eligible for certain research & development tax credits.\u00a0 TCJA changed section 174 of the tax code that previously allowed for immediate deduction of those expenses, and now requires business to capitalize and amortize such expenses over 5 years (if US based expenses) or 15 years (for foreign expenses).\u00a0 The entire CPA industry thought that Congress would fix this before it went into effect for the 2022 tax year, and many (including Magnus Blue) still held out until the summer of 2023 anticipating a resolution for the 2022 tax year. This did not happen and has been devastating for many businesses, especially those in which R&D is core to their business model.\u00a0 We won\u2019t go into details here, but rather we wanted to make sure you were aware of the changes to help prompt conversation with your tax preparer, if applicable.<\/span><\/p>\n

Disclaimer \u2013 Magnus Blue does not update articles past the article date. It is your responsibility to discuss tax matters with your tax professional before making tax-related decisions.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

For the first time in a while, it appears we have only a few changes to keep in mind as we head into the new year.\u00a0 Don\u2019t get comfortable though, it\u2019s not likely to last.\u00a0 We know for certain, several of the TCJA (Tax Cuts and Job Act of 2018) tax law changes are set […]<\/p>\n","protected":false},"author":2,"featured_media":5224,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","inline_featured_image":false,"footnotes":""},"categories":[12],"tags":[],"acf":[],"_links":{"self":[{"href":"https:\/\/magnusblue.com\/wp-json\/wp\/v2\/posts\/5221"}],"collection":[{"href":"https:\/\/magnusblue.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/magnusblue.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/magnusblue.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/magnusblue.com\/wp-json\/wp\/v2\/comments?post=5221"}],"version-history":[{"count":2,"href":"https:\/\/magnusblue.com\/wp-json\/wp\/v2\/posts\/5221\/revisions"}],"predecessor-version":[{"id":5223,"href":"https:\/\/magnusblue.com\/wp-json\/wp\/v2\/posts\/5221\/revisions\/5223"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/magnusblue.com\/wp-json\/wp\/v2\/media\/5224"}],"wp:attachment":[{"href":"https:\/\/magnusblue.com\/wp-json\/wp\/v2\/media?parent=5221"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/magnusblue.com\/wp-json\/wp\/v2\/categories?post=5221"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/magnusblue.com\/wp-json\/wp\/v2\/tags?post=5221"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}