November 29, 2023
Welcome back. We hope you all had a great Thanksgiving. This week’s newsletter: New Day, New CPA (that’s right - we now offer CPA services!). Join us while we review some clean energy updates, expand on 401(k) contributions, and introduce our new CPA on staff.
TAX LAWS: WHAT YOU NEED TO KNOW
The Inflation Reduction Act was passed by the Biden Administration on August 16, 2022. Its purpose was to increase access and investment into lower cost clean energy, and to integrate agriculture and conservation policies that are beneficial for the climate. It’s also to build out the renewable energy industry and create high-paying jobs. Let’s review the Clean Energy updates:
The investment tax credit for solar increased from 26% to 30%.
The credit will stay at 30% for 10 years, then it will decrease to 26% for systems installed in 2033 and to 22% for systems installed in 2034. The tax credit expires starting in 2035 unless Congress renews it.
There is no maximum amount that can be claimed.
With building out the renewable energy industry, there are major incentives for these renewable energy production companies to have strong labor standards. The government thinks that the massive influx of investment into renewable energy will create 1,000,000 new jobs.
It created incentives for state, local, and tribal governments to invest in their communities with renewable energy with several different kinds of cash payments as these entities are tax exempt.
We discuss this and our Solar Tax Shield strategy on our Solar Webinar. Click here to watch.
401(k) CONTRIBUTION DEADLINES
401(k) contribution deadlines are coming up:
December 31, 2023 - Set your payroll if you’re planning to do after-tax contributions
December 31, 2023 - Elective deferrals (pre-tax and Roth)
January 30, 2024 - Any after-tax contributions
Pre-tax: Receive a deduction for the current year, invested dollars grow tax-deferred, and pay taxes when you begin distributions. The elective deferral limit for 2023 is $22,500 and for those over 50, there is a catch-up provision for an additional $7,500. This is beneficial for clients in the top tax brackets, looking for current deductions, and expecting to be in the lower tax brackets in the future. We also have tax strategies to strategically convert these to Roth.
Roth: You have already paid the tax on these dollars, so they grow tax-free and can be distributed tax-free if you are 59.5 years old and the plan has been established for 5 years. The limit for 2023 is $22,500 for those under 50 and $30,000 for those over 50. This is beneficial for clients who are expecting to be in higher tax brackets in the future or are expecting tax rates to increase. Also great for investors expecting large returns for tax-free growth.
Profit-Sharing: Many times employers want to share their profit with their employees in the form of a pre-tax contribution. This adds to your 415 limit balance. The deadline for your employer to make these contributions is the employer's tax filing deadline. This is beneficial for clients looking for additional deductions and pre-tax contributions in excess of the pre-tax elective deferral contributions. There are complicated contribution limits for profit-sharing, so please reach out to our team for assistance with this type of contribution.
Voluntary After-Tax: This is how you fill the rest of your 415 limit as long as your plan allows. These are post-tax contributions which you can immediately convert to Roth. Please send your summary plan description to firstname.lastname@example.org if you aren’t sure if you are able to utilize voluntary after-tax contributions. This is beneficial for clients looking for additional post-tax contributions in excess of the Roth elective deferral contributions.
The 415 limit: Named after section 415 of the Internal Revenue Code, the limit for 2023 is $66,000 before catch-up contributions after age 50 of $7,500. This is an aggregate of all of the different kinds of contributions listed above.
Frustrated with your CPA not understanding your complicated tax strategies? We will be offering packages to our current clients as well as a la carte options such as full service tax preparation and CPA consultations with your current team. As we roll out this new feature, there will be a limited number of spots for the upcoming tax season so contact us soon to secure your spot.
We’ve added a CPA to our team for:
More holistic planning
Informed knowledge of implementing the WD Wealth tax strategies
Confidence that your returns will incorporate all aspects of your financial picture
Researching new tax strategies to expand our library of 350+ strategies
Saving our clients valuable hours on the phone with their current CPAs
Reach out to our team at email@example.com for more information or to secure your spot.
IN THE SPOTLIGHT: MEET OUR NEW CPA
We are thrilled to introduce Madelene Cueva as our newest associate!
“I grew up in Louisville, Kentucky and moved to Utah to attend Brigham Young University. It was there I met my husband and I also received a Masters of Accountancy with an emphasis on accounting taxation. After college, we both obtained positions in Salt Lake City.”
As the newest member of the team, Madelene will be a perfect fit at WD Wealth. She says of her new position, “Working in this collaborative team environment, I see so many possibilities for synergy within the team as well as with the clients. Working directly with clients, providing them cutting-edge expertise will not only save them money, but it will do so in a way that assures that everything is kosher for the clients and for WD Wealth.”
WHAT SHE’S WATCHING
“I have loved this movie for a long time: Life is Beautiful. It is an Italian film set in the Holocaust. It takes such an interesting perspective on war and tragedy. It’s about a father and how he tries to frame up everything for his son in a positive way and how he tries to protect his son through the trauma they were actually living through. The movie speaks so clearly about how a person’s perspective about life is a determinant for survival.”
WHAT SHE’S READING
The Business Ethics Field Guide by Bill O’ Rourke. It’s a great little resource that is framed up like a wilderness survival guide on how to navigate the wilderness. Only it applies to navigating situational pitfalls and traps of being in business. So the author illuminates different scenarios such as what if a superior asks you to do something unethical or something you disagree with. This resonates with me as it confirms and reminds me what my standards are—that I want to do the best for my clients and the best for myself at the same time.
TAKE A BREAK
Answer this riddle (don’t Google it!):
I am always taken, but never given.
I am often traded, but never bought.
Yet, I am indispensable to those who need me.
What am I?
Submit your answers to firstname.lastname@example.org. We’ll let you know if you got it right and we’ll reveal the answer in the next newsletter.
Last week’s TAKE A BREAK answer was B: A con artist went door to door peddling fake investment magazines. As people handed over their money, he took it and ran. Police didn't have to look hard to find the culprit because his full name and face were on the cover of the magazine. That’s right, it never happened! Great job to everyone who guessed right. See if you can beat this week’s riddle.
If you missed last week’s newsletter, click here to catch up.
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See you next time!