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Welcome to the FI Mastery Journey, a weekly newsletter where you receive actionable ideas from me to help tame financial chaos, get your financial house in order and live your legacy.
Here’s how it works: each week, you’ll receive one article written by me. You’ll also get three simple questions that go along with the week’s article to help jog your mind and inspire you to take small, bite-sized financial wellness actions.
And, you’ll also get an inside look at the research I’m reading.
Follow along for one year and you will have completed all the work necessary to keep your financial house in order.
My goal in all of this work?
To provide you with the tools, resources, and insights to help you take one step closer to becoming the master of your own financial independence journey.
This Week at a Glance
- Tax season is now well underway. And this season brings with it opportunities and headwinds in the current tax environment. That’s why this week, we’re offering you three ways to stay ahead of tax changes so you don’t end up leaving money on the table.
- Markets sold off into the final week of trading in January on disappointment that Fed rate cuts likely will be delayed. Nevertheless, most major indices ended up posting gains for the month on pivot optimism and the potential for an economic soft-landing.
- ICYMI – Launching a startup can be your ticket to financial independence. But without the right preparation, you could end up running out of runway before your ideas have time to take off. That’s why this week, I’m offering three essentials to consider before you quit your W2 job.
Tax Changes to Consider Now and in the Future
Each New Year brings with it some form of change, especially when it comes to taxes.
But let’s face it: with so much going on at the start of the year, who has time to keep up with all the tax changes, right?
Well, fortunately, I’ve been keeping an eye on some of the tax developments coming down the pike this year, so you don’t have to.
And what did I find?
Well, beyond the usual inflation adjustments to tax brackets, deductions, and contribution limits, there are few material changes to note in 2024.
Even so, constant gridlock over a seemingly never-ending budget deal on Capitol Hill, coupled with general elections later on in the year, could likely complicate Federal returns once again.
And while we don’t anticipate any meaningful tax legislation to pass in the current election cycle, certain portions of tax law are scheduled to sunset in the next couple of years, likely leading to higher taxes for many households.
How to Be Proactive About Tax Changes
So then, the big takeaway here is that while there are few legislative changes to worry about this year, there are still a few steps to consider today so you can take full advantage of tax changes now and into the future.
Here’s how:
Step #1: Maximize the IRS Inflation Indexing Adjustments
The IRS makes annual inflation adjustments to tax brackets, contributions, and deductions.
This means higher contribution limits to 401(k)s and IRAs, and more money you could be saving for retirement.
Ask yourself: “Am I making the most of my tax-advantaged savings accounts, and could I do more now?”
Review your current tax-advantaged savings contributions and look for ways to maximize them where appropriate.
Step #2: Beware Capitol Hill Gridlock
Congressional gridlock can impact IRS operations, leading to delays in processing tax returns and refunds.
That’s why, to reduce headaches, it’s crucial to eliminate friction with the IRS, including filing early and being mindful of your withholdings.
Ask yourself: “Do I have what I need to file my returns now? And what can I do to reduce next year’s liabilities and penalties?
File your tax returns early to avoid congress-related delays, and make sure your withholdings are accurate, especially if you receive equity compensation.
Step #3: Realize Income Now While Taxes are Low
Many provisions of the Tax Cuts and Jobs Act will sunset in 2026, meaning many will pay higher taxes soon.
But, there’s still time to take advantage of the tax cuts before it’s too late.
Ask yourself: “How will the TCJA sunset affect my future tax liabilities, and what strategies can I use now to mitigate these impacts?”
Consider strategies like Roth conversions, realizing capital gains now, and estate planning tools to take advantage of today’s low taxes and current exemptions.
You can learn more by reading the full article here >>>
What I’m Reading
We’re all busy in the daily rush of things. That’s why I’m sharing a list of articles that I’ve read this week to help you stay on top of your own financial independence journey.
I’ve consolidated all of these links here for your ease of viewing.
- IRS Has Collected More than $520M in Back Taxes from Delinquent Millionaires So Far
- What Are Capital Gains Taxes?
- 2023-2024 Tax Brackets and Federal Income Tax Rates
- 5 Easy Ways to Lower your Taxable Income in 2024
- Net Investment Income Tax: Impact on High-Net-Worth Portfolios
Thanks for taking a look,