Counterintuitive Money Advice: Investing Against the Grain
Making sound financial decisions often involves embracing counterintuitive strategies. Let’s take a look at a few examples.
Disclaimer: The information provided in this article is for general informational purposes only and should not be considered professional tax advice. Every financial situation is unique, and tax laws are subject to change. We strongly recommend consulting with a qualified tax professional to discuss your specific circumstances before making any tax-related decisions.
Tax season is not the most joyful time of year, but it is certainly one of the most important. With the filing deadline fast approaching, here is a rundown of the latest tax updates to help you maximize deductions, avoid penalties and keep more of your hard-earned money. Plus, we are keeping an eye on the big tax changes that might be passed down in Washington later this year.
A couple of quick notes before we dive in. If you tend to file your own taxes, you may be able to file free, thanks to the expansion of the IRS Direct File program. Previously a pilot program, it is now available in 25 states, giving more people access to an easy and cost-free way to submit their returns. Check the website to see if you are eligible.
Note: There is been a bit of confusion about the Direct File program with the head of the new Department of Government Efficiency, Elon Musk, posting on social media that it had been “deleted.” However, as of now, the website is still live.
Also, more taxpayers are facing IRS penalties for underpayment, often due to freelance income where taxes are not automatically withheld. If you are facing a penalty for underpayment, take the opportunity this tax season to adjust your withholding on W-4 forms if you have underpaid. And if you earn income outside of an employer, make a plan to get those estimated payments in on time.
Some things in life are certain: death, taxes, and annual adjustments due to inflation. The IRS has once again made incremental shifts to income thresholds for tax brackets. You may find yourself in a different bracket this year, potentially changing how much you pay in income and capital gains taxes.
The standard deduction has also gone up, making it even more attractive for most filers to skip itemizing and opt for the automatic deduction:
Tax rules for 2024 allow you to save even more in tax-advantaged accounts this year:
While 401(k) contributions for 2024 are closed, you can still make 2024 contributions to an IRA until April 15, 2025. And if you are thinking long-term, now is a great time to kickstart your 2025 contributions.
For those enrolled in a high-deductible health plan (HDHP), HSAs remain one of the best ways to save on taxes while covering medical expenses. Contribution limits have increased to $4,150 for individuals and $8,300 for families, with an additional $1,000 catch-up for those 55+ in age.
If you are planning to pass on wealth to loved ones, here is what you should know:
Electric vehicles are becoming increasingly popular. In fact, the number of EVs on the road rose more than 65% in 2024. Government incentives are a key factor driving adoption, including up to $7,500 in tax credits buyers may take right at the dealership. If you were one of them, the IRS requires that you prove eligibility for this discount by reporting your purchase on your tax returns. To do so, you will need to file Form 8936, Clean Vehicle Credits, and provide your vehicle’s VIN.
Gig sellers and casual resellers, beware of IRS reporting obligations. If you sold goods online in 2024 on platforms like eBay, StubHub or Etsy, you may receive a 1099-K tax form if your sales exceeded $5,000. (Here is looking at you if you upsold your Eras Tour ticket!) Previously, the threshold to receive a 1099-K was $20,000, but that threshold is dropping swiftly. In 2025, it is scheduled to fall to $2,500.
One of the biggest potential tax shake-ups in recent years is on the horizon: The first Trump Administration’s Tax Cuts and Jobs Act (TCJA) of 2017 is set to expire after 2025. This means major changes could be coming, including:
The current administration appears ready to act, suggesting it will work with Congress to extend the TCJA. However, nothing will be certain until changes are made to the tax law. With so many possible changes in play, staying ahead of tax law updates is more important than ever.
This post was written and first distributed by The Writing Company.
DISCLAIMER
Shore Point Advisors is an investment adviser located in Brielle, New Jersey. Shore Point Advisors is registered with the Securities and Exchange Commission (SEC). Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. Shore Point Advisors only transacts business in states in which it is properly registered or is excluded or exempted from registration. Insurance products and services are offered through JCL Financial, LLC (“JCL”). Shore Point Advisors and JCL are affiliated entities.
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