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Whatever the economy is doing right now, there will be a momentous moment when the current tax structure expires. "Right now," writes author Daniel McDonald, "federal income taxes are about as low as they have ever been. The highest current tax rate, 37 percent, compares favorably to the 39.6 percent and 50 top tax rates that were common in the years 1982-2017." McDonald goes on: "If Congress does nothing, however, on January 1, 2026, the honeymoon is over. Tax rates will rise to their higher, 2017 rates (adjusted for inflation). Not only will rates go up, but the income levels at which the tax rates change will kick in at lower levels of income." While the news media are wringing their hands over who will win the presidential election of 2024, the actual real-world impact will be determined by who wins the congressional election. If the current tax rates were allowed to expire, and the rates defaulted to their previous values, large-scale misery would be unleashed on people in all income levels, from the lowest to the highest.

ASK MICKEY, CPA, CVA  QUESTION: What effect would a recession have on taxes? ANSWER: A recession can have various effects on taxes, depending on how governments choose to respond and the existing tax structure. Here are some key potential impacts: 1. Decrease in Tax Revenues: During a recession, economic activity slows down, leading to lower incomes, reduced corporate profits, and decreased consumer spending. As a result, income tax, corporate tax, and sales tax revenues typically decline. 2. Increased Pressure on Government Spending: Recessions often lead to higher unemployment rates, increasing the demand for government assistance programs such as unemployment benefits and social services. This can put additional pressure on government budgets, potentially necessitating adjustments in tax policy. 3. Tax Policy Adjustments: *Tax Cuts: To stimulate the economy, governments might implement tax cuts, reducing the tax burden on individuals and businesses. This can increase disposable income and encourage spending and investment. *Tax Incentives: Governments might introduce or expand tax incentives for businesses, such as investment tax credits or accelerated depreciation, to encourage investment and job creation. * Temporary Tax Relief: Measures such as deferring tax payments or reducing tax rates temporarily might be introduced to provide immediate relief to those affected by the recession. 4. Public Debt and Future Taxes: Increased government spending and decreased tax revenues during a recession can lead to higher public debt. In the long term, this might necessitate tax increases or spending cuts to manage the debt. 5. Shift in Tax Burden: Governments might consider shifting the tax burden to more stable revenue sources. For example, they might increase taxes on wealth or luxury goods, which are less affected by economic cycles, or introduce new taxes such as carbon taxes. 6. Impact on Local Governments: Local governments, which rely heavily on property taxes, might experience reduced revenues if property values decline during a recession. This can impact local services and infrastructure projects. Overall, the specific effects on taxes during a recession will depend on the economic conditions, government priorities, and policy responses tailored to address the recession's challenges. #recession #taxes #inflation #depression #taxes2024 #tax #taxaccounts #taxprepayer Thomas M. "Mickey" O'Neal, CPA Braeleigh Blakeney Natalie O'Neal Stephanie Vande Vegte

Good news for taxpayers this year! The IRS has made some inflation adjustments that could result in bigger tax refunds for many. Here's what you need to know: The IRS has adjusted many of its provisions for inflation, increasing the standard deduction and raising its tax brackets by 7.1%, a historically large adjustment. If your income didn't keep pace with inflation last year, you could see a larger refund of up to 10% more. Taxpayers who may see bigger refunds include middle- and lower-income workers. These homeowners tapped into expanded home energy tax credits and low-income families with children due to an expansion of the Earned Income Tax Credit. However, it's not all good news. Some taxpayers, especially those who took on side gigs last year, could owe more, and Social Security beneficiaries may face higher taxes. Remember, understanding your tax situation can help you plan better for the future. Start early, use the resources available, and if you need help, don't hesitate to reach out it! Repost to help your network and follow me for more. #TaxSeason2024 #tax #wealth #financialliteracy #investment

New year, new planning opportunities! Inflation caused noticeable changes to tax brackets and exemption limits for 2024. The lifetime gift and estate tax exemption rose to $13.61 million per person for 2024, an increase of $690,000. In addition, annual exclusion gift exemptions, as well as 401k and IRA contribution limits increased. This Wall Street Journal article provides a nice overview. #financialplanning #investmentmanagement #fiduciaryservices Link to the article: https://lnkd.in/eGKGvj_i

Good news for taxpayers this year! The IRS has made some inflation adjustments that could result in bigger tax refunds for many. Here's what you need to know: ▪️ The IRS has adjusted many of its provisions for inflation, increasing the standard deduction and raising its tax brackets by 7.1%, a historically large adjustment. ▪️ If your income didn't keep pace with inflation last year, you could see a larger refund of up to 10% more. ▪️ Taxpayers who may see bigger refunds include middle- and lower-income workers. These homeowners tapped into expanded home energy tax credits and low-income families with children due to an expansion of the Earned Income Tax Credit. ▪️ However, it's not all good news. Some taxpayers, especially those who took on side gigs last year, could owe more, and Social Security beneficiaries may face higher taxes. Remember, understanding your tax situation can help you plan better for the future. Start early, use the resources available, and if you need help, don't hesitate to seek it! #TaxSeason2024 #IRSUpdates

The tax slabs are quite volatile. Even a person with average package of Rs. 3,00,000 have to pay tax. Looking at the tax slabs, in a consumption led economy - it’s going to show a upward trend. Understanding investment patterns as per income levels with tax planning is crucial. Investors may diversify across sectors to reduce risk and get maximum returns. But, tax planning is also important as well. So, it’s basically like you get a monthly salary and you go on to invest the money, for instance let us assume (invest according to your capacity): You receive Rs. 1,00,000 monthly for which you invest let’s say Rs. 20,000 a month at 11-13% return per annum. On a yearly basis, you earn Rs. 2,40,000 + Rs. 26,000 = Rs. 2,66,000 per annum. Simple math, not much logic. But what if, you consult and plan to save taxes (80C, 80CCD, 80D & 10B) mutual funds, health insurance, NPS & PPF from a small amount of your daily investing income. Now, you invest what amount you actually planned to and in contrast to that you saved tax and claimed deductions from your income. This simple strategy would help you invest as planned and save money from taxes. #tax #finance #riskmanagement #investmentplanning #linkedinforcreators

"The price of paying no taxes tomorrow is paying taxes today." This comes as a pretty big disappointment for some of our prospective W-2 investors who are getting killed in a 37% tax bracket. But taxes are historically low right now compared to previous decades, so the likelihood is that they will go up (just like interest rates.) If the tax rate goes up as they likely will, you're better paying now when rates are "on sale," and focus on saving taxes later. So what's the solution without leaving your W-2? (If you want to leave the W-2, you have more options as a business owner or real estate professional #thatsforadifferenpost) 1️⃣ Create more UNEARNED income (passive income and long term capital gains are taxed at a lower rate) 2️⃣ Pay taxes now (sorry) and put aside as much money as you can by living below your means into a variety of investment strategies to save on taxes later such as: 🟢 maxing out tax free vehicles (Roth and cash value life insurance) 🟢 tax deferral (over and over for the rest of your life) 🟢 tax offset (unearned income offset by real estate depreciation "losses") ----- Quote PS - A quick read on the subject is "Power of Zero" by David McKnight. He doesn't get into real estate specifically, but it's a great starting point. Hit 🔔 in my profile 🏝️Emma Powell🚐 for free daily #realestateinvesting tips for #financialfreedom and #earlyretirement

Good news for taxpayers this year! The IRS has made some inflation adjustments that could result in bigger tax refunds for many. Here's what you need to know: ▪️ The IRS has adjusted many of its provisions for inflation, increasing the standard deduction and raising its tax brackets by 7.1%, a historically large adjustment. ▪️ If your income didn't keep pace with inflation last year, you could see a larger refund of up to 10% more. ▪️ Taxpayers who may see bigger refunds include middle- and lower-income workers. These homeowners tapped into expanded home energy tax credits and low-income families with children due to an expansion of the Earned Income Tax Credit. ▪️ However, it's not all good news. Some taxpayers, especially those who took on side gigs last year, could owe more, and Social Security beneficiaries may face higher taxes. Remember, understanding your tax situation can help you plan better for the future. Start early, use the resources available, and if you need help, don't hesitate to seek it! #TaxSeason2024 #IRSUpdates

More proof that if you look hard enough, there is usually a silver lining. Separately, for those of us with high state/local taxes, keep an eye on SALT deduction legislation -- there are several bills in play with the most prominent trying to double the SALT deduction for married couples for 2023.