As the season of gratitude and self-reflection approaches, it's a perfect time to take stock of all we have to be thankful for. As a CPA, I find myself especially grateful for the financial tools that allow me to help my clients save money, plan ahead, and approach tax season with confidence. Let me share with you the four essential things I'm thankful for in my profession.
The Standard Deduction
The standard deduction has been a blessing for many clients, simplifying filing and maximizing returns. In 2023, it's set at $15,750
for single filers, $31,500
for married couples filing jointly, and $23,625
for heads of household. When itemized deductions fall short of these amounts, the standard deduction is an easier and often more lucrative choice. I once had a client who spent hours laboring over receipts only to discover that the standard deduction significantly increased their refund; the relief and surprise on their face was priceless!
Retirement Account Contributions
Helping clients secure their future is rewarding, and retirement accounts offer some of the best opportunities to do so. Individuals can contribute up to $7,000
to an IRA, with an additional $1,000
allowed if they are over 50. Meanwhile, 401(k) contributions can rise to $23,500, or $31,000
for those over 50. Keep an eye on the new catch-up contribution rules for those aged 60-63 in 2025, reverting at 64. Whether opting for Traditional (tax reduction now, pay taxes on withdrawal) or Roth (tax now, growth and withdrawal tax-free) contributions, these are powerful savings tools.
Health Savings Accounts (HSAs)
HSAs provide a triple tax advantage that few other accounts can match: tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified expenses. In 2023, individuals can contribute $4,300, while families can contribute $8,550, with an extra $1,000
for those aged 55 or older. Once a couple realized their HSA could cover unexpected medical expenses tax-free, their stress about rising healthcare costs eased significantly.
The Child Tax Credit (CTC)
Families have much to be thankful for with the Child Tax Credit, which offers up to $2,200
per qualifying child under 17. Up to $1,700
of this amount may be refundable, offering additional financial relief. The phase-out thresholds are generous, with single filers capped at $200,000
and joint filers at $400,000. I remember a growing family that optimized their finances around the CTC, enabling them to invest more in their children's futures.
As the year draws to a close, take the time to review these opportunities and see how they can benefit you. If you're looking to maximize your financial well-being, don't hesitate to reach out for guidance. After all, it's always helpful to have a professional friend in your corner.
