Four Things I’m Thankful for as a CPA
As we reach that time of year where gratitude and self-reflection come to the forefront, I've been reflecting on the tools and opportunities I have as a CPA. I'm particularly grateful for the ability to help clients save money, plan for the future, and face tax season with confidence. So, I've decided to share with you the four things I'm most thankful for in my profession.
The Standard Deduction
Every tax season, I am thankful for the standard deduction, which simplifies the tax filing process for many of my clients. For single filers, the amount stands at $15,750, while married couples filing jointly see a deduction of $31,500. For those filing as heads of household, it's $23,625. If itemized deductions fall short of these amounts, opting for the standard deduction is typically the smarter and less cumbersome choice. I've had clients worry about needing to itemize every year, only to find that the standard deduction saved them both time and headache.
Retirement Account Contributions
Planning for retirement is a cornerstone of financial security, and as a CPA, I appreciate the robust contribution limits available to my clients. IRAs allow contributions up to $7,000, or $8,000 if you are 50 or older. For those with a 401(k), the contribution limit is $23,500, rising to $31,000 if you're age 50+. Looking ahead, there's an exciting enhancement in catch-up contributions for ages 60-63 starting in 2025, although this reverts at age 64. It's rewarding to see clients diversify their savings between Traditional and Roth accounts, tailored to their tax circumstances and future plans.
Health Savings Accounts (HSAs)
Not enough can be said about the versatility of Health Savings Accounts. For individual coverage, the contribution limit is set at $4,300, and for family coverage, it's $8,550, with an extra $1,000 if you’re aged 55 or older. HSAs provide an incredible ‘triple tax advantage’: tax-deductible contributions, tax-free growth, and tax-free withdrawals on qualified healthcare expenses. I once helped a client manage an unexpected medical bill through an HSA, transforming what could have been a financial setback into a simple, stress-free solution.
The Child Tax Credit (CTC)
The Child Tax Credit is another element I’m grateful for, offering up to $2,200 per qualifying child under the age of 17, with up to $1,700 potentially refundable. This is a vital relief tool for families managing to stay afloat during economic challenges. The phase-out thresholds are quite generous too—$200,000 for single filers and $400,000 for joint filers—making this credit accessible to a wide range of taxpayers. It's always a pleasure to inform parents of the significant tax savings they can achieve through the CTC.
As we approach the year's end, I encourage everyone to take a closer look at these opportunities. Planning now could mean substantial savings and benefits later. If you’re interested in maximizing these benefits, reach out. Professional guidance can always lead to even greater savings, providing peace of mind during tax season and beyond.