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DECEMBER 2023 Newsletter: IRS Releases 2024 Tax Brackets, Retirement Contribution Limits

December 08, 2023

The Internal Revenue Service recently released updated income tax brackets, standard deduction, and retirement contribution limits for the 2024 tax year. While these taxes are not due for some time, it may benefit you to start thinking ahead.

Overall, more than 60 provisions have changed.  Revenue Procedure 2023-34 provides detailed information about these annual adjustments. Here are a few of the most critical tax bracket and retirement contribution limit changes.

Tax Bracket Inflation Adjustment

Overall, tax brackets have been adjusted upwards by 5.4% for 2024. The primary purpose of this adjustment is to account for inflation, which is based on the Consumer Price Index. The government’s goal is to keep income taxes in sync with consumer buying power.

Standard Deduction

The standard deduction has increased to $29,200 for married couples filing jointly, up $1,500 from the previous year. For single filers, this number increased by $750 to $14,600.

Individual Retirement Accounts (IRAs)

IRA contribution limits are up $500 in 2024 to $7,000. Catch-up contributions for those over age 50 remained at $1,000, bringing the total limit to $8,000.

Roth IRAs

The income phase-out range for Roth IRA contributions increased by $8,000 to $146,000-$161,000 for single filers and heads of household. For married couples filing jointly, phase-out will be $230,000 to $240,000 (a $12,000 increase). Married individuals filing separately see their phase-out range remain at $0-10,000.

Workplace Retirement Accounts

Those with 401(k), 403(b), 457 plans, and similar accounts will see a $500 increase for 2024, bringing the total maximum contribution amounts to $23,000. The catch-up contribution for those aged 50 and older remains at $7,500, bringing their total limit to $30,500.

Gift Tax

The annual gift tax exclusion is now $18,000 for 2024, an increase of $1,000 from the previous year.

Remember that we provide updates for informational purposes only, so consult with your tax professional before making any changes in anticipation of the new 2024 levels. You can also contact our offices, and we can provide information about the pending changes.

  • Did you know? The "Tools" menu item on our website not only offers an overview of Account View and Wealthvision, but links various calculators and tax tools that may be useful for the upcoming tax season.

  • 2024 is on the horizon, and all of us at CRF would like to take this moment to express our heartfelt gratitude for your business. We hope you and your loved ones have a wonderful holiday season and upcoming year filled with new possibilities, opportunities, and good times.

Are Social Security Benefits Taxable?

Did you know that if you are receiving Social Security benefits, you may have to pay federal income tax on a portion of these benefits? The amount you have to pay may depend on your specific income and filing status.

To find out whether your Social Security benefits are taxable - if you are single, take one-half of the Social Security money you received throughout the year and add it to your other income, which includes pensions, wages, interest, dividends, and capital gains. If the total comes to more than $25,000, then part of your benefits may be taxable.

If you are married and filing jointly, take half of the Social Security money you received throughout the year and half of your spouse’s Social Security benefits and add both of those amounts to your combined household income. If the total is more than $32,000, part of your benefits may be taxable.

On its website, the IRS then lays out the percentage of benefits that are taxable, based on the above calculation. These percentages vary between 50 percent and 85 percent and depend on your filing status and income levels. For example, if you are filing single with $25,000–$34,000 income, 50 percent of your Social Security benefits may be taxable.

*This information is not intended to substitute for specific individualized tax advice. We suggest you discuss your specific tax issues with a qualified tax professional.

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What is website spoofing?
Website spoofing is a cyberattack method in which a cybercriminal builds a fraudulent or phony website that resembles the design and functionality of an authentic website. This cyberattack deceives victims into thinking they are engaging with a legitimate website when in reality, they are interacting with a malicious replica. Victims of website spoofing can experience a variety of different cyberattacks such as phishing, identity theft, and malware installation.

How to identify spoofed websites?
Websites can include banking institutions, social media, e-commerce, and email services. This cyberattack relies on the concept of social engineering and relies on the gullibility of users to trust the visual familiarity of legitimate websites. When visiting a website, please take the following precautions:

  • Verify the URL: Carefully examine a website’s URL before entering any personal/financial information.
  • Use a secure connection: Ensure that the website utilizes HTTPS encryption.
  • Caution when opening links: Do not interact with links or websites from unknown senders.
  • Update your software: Keep your web browser, operating system, and security software updated to prevent vulnerabilities from being exploited.
  • Multi-factor authentication: Enable MFA to add another layer of security for your accounts.

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Last Month's Riddle: How many cubic yards of dirt are in a hole 9' deep, 8' long, and 1' wide?

Answer: Zero. There is no dirt in a hole.