Updates to US Taxes and Financial Regulation Compliance for 2024 You Need to Know

Updates to US Taxes and Financial Regulation Compliance for 2024 You Need to Know

January 07, 2024

Long after the corks have been swept up and the New Year’s resolutions start to wane a bit, it’ll be time to get your business or personal finance situation tax-ready again. As we wave farewell to 2023 and turn our heads toward the future, looking out for the many changes to national tax codes and financial regulations goes a long way to best preparing your financial planning. 

Green Valley Tax team has put together some of the more well-known issues that may crop up this coming 2024 year. Hopefully, getting a step ahead for these situations will give you peace of mind in your preparation. Let’s dive right in! 

AI and Inflation Reduction Act 

In mid-2023, there was a small announcement that changes were coming to the IRS's operation of conducting audits and account reviews. At first, this seemed like a minor change to personnel or adding a few more desks. In November of 2023, we got way more info when the Inflation Reduction Act was enacted. 

The goal here is to return the agency to a state of “fairness” by focusing more on higher earners (over $250,000 in recognized tax debt or $1 million in earnings) instead of what is perceived as blue-collar families. Partnerships and larger corporations are equally on the chopping block, so there is more public support for the IRS compared to years past when someone’s great aunt was given an audit notice after living on a fixed income for twenty years. 

As part of this initiative, artificial intelligence (AI) will be integrated into systematic checks. That will be a double-edged sword as AI takes a long time to “teach” how to interpret context in earnings, expenses, and deductions. 

We will also see greater emphasis paid toward digital assets (cryptocurrencies and NFTs), advanced scrutiny on FBAR (Report of Foreign Bank and Financial accounts) violations, and labor brokers hiding assets behind shell companies. 

Simply put, the IRS wants a better reputation, and Congress has backed these initiatives with appropriate funding. While the organization is still a long way from the powerful past, it is getting a much-needed overhaul. 

Changing Tax Brackets 

A little more good news for those who have relied on a paycheck more than assets or investments is recent changes to tax brackets for 2024. Financial planning will take on a new look at federal income tax brackets, and earnings thresholds for each tier will adjust by about 5.4%. This is to accommodate a higher inflation rate. 

While that change is slightly lower than last year, it could mean anything with similar wage earnings from year to year can expect a minor increase in paycheck equity (depending on withholding, of course). Even with elevated prices for housing and food, that should result in more discretionary income spreading among investments and savings. 

This mostly applies to those taking the standard deduction, as the limitations on itemized deductions remain open. 

Contribution, Deductions, and Gifts 

The IRS was kind enough to help everyone, from women-owned businesses to private wage earners, with some benefits in contributions, gifts, and donations for 2024. For example, the annual gift tax limit will increase to $1,000 ($18,000 in 2024 compared to $17,000 in 2023). 

Employers can now contribute up to $23,000 for eligible 401(k) plans, reflecting a $500 annual increase. The same is true of those with IRAs, where the limit is now $7,000 compared to $6,500. Unfortunately, the “catch-up” contribution for those over 50 years $8000 for 2024.  

Income limits for items like the Saver’s Credit or Roth IRA contributions have all increased. There is a phase-out range, and you’ll want to go through these with a fine-toothed comb using a professional financial advisor like our team at Green Valley Tax Services. 

For example, a single head of household earner with $146,000 to $161,000 in income can expect a change from $138,000 to $153,000 in Roth contributions. 

The primary idea among these changes is to provide more disposable income for earners. It is likely to significantly impact how much you pay in taxes and bring home to your asset allocation, so be sure to take your time through every single one this season. 

One Step Closer to Tax Cuts and Jobs Act TCJA Breaks 

We are now only a year or two away from most of the Tax Cuts and Jobs Act (TCJA) breaks ending. This means corporate profits and individual tax rates will change significantly unless something happens on the House Ways and Means commitment makeup. 

Consider the average American household. Many families are hanging on by a thread, and without these TCJA breaks, they can expect to pay a much higher tax obligation in 2025. 

What this means for you is that you need to start financial planning for these changes to taxes and representation now. Even though it only shows a 3-7% difference in brackets and cuts, that translates to hundreds of thousands or millions of dollars for business owners and private citizens. 

FinCen BOI Begins Accepting Business Ownership requirement Reports 

On January 1, 2024, the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) began accepting reports concerning the new beneficial ownership information (BOI) rule. Any company created in 2024 has 90 days to report, while those created prior to 2024 only get the full year. 

This change will affect close to 30 million businesses across the USA, from small mom-and-pop storefronts to multinational corporations operating inside our borders. However, unlike most government regulations, this new requirement targets smaller businesses that were created by first filing a document with a Security of State. 

If you don’t file a report, you can be subject to $500 per day and up to two years in jail. Your goal is to file: 

  • The beneficial owners of the entity.
  • The individuals who have applied with specified governmental authorities to form the entity or register it to do business. 

You should know this isn’t the IRS. When you file a BOI report, you are directly communicating with FinCEN. They are trying to drastically reduce any “shell” companies in the USA by cracking down on anonymous ownership used in money laundering, tax evasion, and other criminal activity. 

If you are a “beneficial owner,” meaning you have at least 25% of the ownership interest or substantial control over the company, you will be required to report to BOI. That information must include your name, date of birth, address, some form of identifiable document like a US driver’s license or passport, and usually the legal name and street address of the entity in question. 

Reporting requirements are as follows: 

  • 90 days if the business/entity was created on January 1, 2024, or before January 1, 2025.
  • Up until January 1, 2025, if your entity was created before January 1, 2024.
  • 30 days if business is created on or after January 1, 2025. 

There is no annual requirement. You report your BOI once and then update it with any changes to ownership or location. Again, this isn’t to levy additional fees or tax obligations. It is more important to get accurate tracking of who owns what entities in the US. 

The repercussions of this new law are going to massively impact the financial world. You will see all kinds of businesses suddenly being hefted onto local citizens for ownership rights because foreign entities do not want to be identified. It can also negatively impact any private citizen who operates a shell company for any purpose. 

Final Thoughts 

There are many other changes that are impacting taxes and financial planning for 2024. Between the new BOI filing requirements and changes to income brackets, your best bet as a woman-owned business is to get complete peace of mind by hiring our team at Green Valley Tax Services.

For decades, we have remained a women-centric business, staying one step ahead of the game by informing and adjusting each of our client's situations and planning based on new regulations and compliance. Give us a call today to schedule a consultation, and let’s discuss how your tax planning strategy will need to be adjusted to account for new 2024 laws so you can maximize your wealth and future-proof your livelihood.