Some of the important tax changes that may impact your bottom line in the 2024 tax filing season are set forth below. While this is not a comprehensive list of changes, these are the ones that may impact most taxpayers.

• No Extension of Filing Deadline

The tax filing deadline for 2023 tax returns is not being extended this year. The following relevant filing due dates are:

• March 15, 2024 for tax filers that are partnerships and S-corporations
• April 15, 2024 for tax filers that are individuals, C-corporations, trusts and estates

• Beneficial Ownership Reporting (BOIR):

If you own 25% or more of a corporation, limited liability company (including any single member LLC), or partnership, you are now required to report your ownership to the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN).  Entities starting on or after January 1, 2024, are required to report their Beneficial Ownership Reporting within 30 days of the entity’s formation or registration with the Secretary of State, although there is a proposal to extend this requirement to 90 days for entities formed in 2024 only. Entities formed prior to January 1, 2024, must file their report of their Beneficial Ownership by January 1, 2025.  If any of the reported information changes or a beneficial ownership interest is sold or transferred, the entity must report this information within 30 days of the change or can face penalties.  This reporting requirement is part of the federal government’s anti-money laundering and anti-tax evasion efforts and is an attempt to look beyond shell companies that are set up to hide money.

• Required Minimum Distribution (RMD) Age:

The mandatory age to begin taking required minimum distributions (RMDs) has been revised to:

• Age 73 for those who turn age 72 after 2022 (taxpayers born in 1951 through 1958)
• Age 75 for those who turn age 74 after 2032 (taxpayers born after 1958)

• Annual Gift Tax Exclusion:

The 2024 annual gift tax exclusion is $18,000 (up from $17,000 in 2023).

• State Disability Insurance (SDI):

The state disability insurance (SDI) tax rate for 2024 has increased to 1.1% (up from 0.9% in 2023).  Beginning January 1, 2024, the SDI tax will apply to an employee’s total wages rather than being limited to a specified amount (it was “capped” at $153,164 in 2023).  This change will cause highly compensated employees to have lower take home pay.

Instead of participating in the state’s disability insurance program, California allows employers to offer a voluntary plan, but any of these plans has to be pre-approved by the California Employment Development Department (EDD). The plan will still be funded by employee contributions, but certain requirements need to be met, including providing coverage that is better than coverage offered by the SDI program. The voluntary plan must be offered to all of an employer’s California employees. This option could be beneficial for businesses that have highly compensated employees or a highly compensated owner.  Although SDI tax is funded solely through employee withholding and will not result in an employer’s costs being directly increased, offering a voluntary plan will enable employees to keep more of their wages.

• Internal Revenue Service and Franchise Tax Board Online Accounts:

Taxpayers can sign up for an online Internal Revenue Service (IRS) and Franchise Tax Board (FTB) account.  Doing so can prove to be very beneficial in the tax preparation process.  Within these online accounts, taxpayers can view tax payments, refunds, order tax transcripts, view tax letters and view their tax history.  This helps your tax preparers when preparing your tax return and to respond to any tax notices received.

By Lisa Grossman Ben-Tal, Certified Public Accountant.

Lisa Grossman Ben-Tal, CPA practices in West Los Angeles, and is Executive Director Yukelson’s tax preparer. You may reach Lisa at (310) 348-9094, or lisa@grossmanbtcpa.com.