Author: Service2Client

The Social Security Fairness Act of 2023: More Retirement Income for Teachers, Police, Firefighters & Gov. Workers

The Social Security Fairness Act of 2023, More Retirement Income for Teachers Police Firefighters & Gov WorkersThe Social Security Fairness Act of 2023, formally known as H.R. 82, aimed at ending two provisions in the Social Security system that affect public sector employees who have earned pensions from jobs not covered by Social Security. These provisions are the Windfall Elimination Provision and the Government Pension Offset, both of which reduce or eliminate Social Security benefits for workers who have worked in both public-sector and private-sector jobs.

The Problem: WEP and GPO

The Windfall Elimination Provision and the Government Pension Offset were originally designed to prevent public sector workers from receiving larger Social Security benefits than they would have been entitled to had they worked in jobs covered by Social Security for their entire careers. However, critics argue that these provisions disproportionately harm workers who have spent a significant portion of their careers in public service, such as teachers, police officers, firefighters, and other state and local government employees.

Windfall Elimination Provision (WEP):

The WEP reduces the Social Security benefits of individuals who have worked in both the private sector (where they paid into Social Security) and the public sector (where they often did not contribute to Social Security). Typically, Social Security benefits are based on an individual’s 35 highest-earning years. The WEP alters the formula used to calculate benefits for individuals with fewer than 30 years of substantial earnings in Social Security-covered employment, leading to a lower Social Security benefit than they would otherwise be entitled to. For many, this results in a significant reduction in the monthly payment they would have received under the standard Social Security formula.

Government Pension Offset (GPO):

The GPO affects spouses and widows/widowers of Social Security beneficiaries. Under this provision, individuals who receive a government pension from work that was not covered by Social Security (such as state or local government employees) see a reduction in their spousal or survivor benefits from Social Security. The offset is calculated by reducing the spousal or survivor benefit by an amount equal to two-thirds of the government pension. This can leave many public employees with little to no spousal or survivor benefits despite their spouse having paid into Social Security.

What H.R. 82 Seeks to Accomplish

By eliminating both the WEP and GPO, the bill aims to ensure that public sector workers who have earned Social Security benefits through their work in the private sector are not penalized by reductions in those benefits. It also seeks to provide fairer treatment for the spouses and survivors of government employees who may otherwise see their Social Security benefits reduced or eliminated entirely.

The bill has garnered bipartisan support, as lawmakers from both sides of the aisle recognize the fairness of eliminating these provisions, which many see as an unjust penalty against those who have dedicated their careers to public service. H.R. 82, if passed, would provide much-needed relief to millions of retirees, many of who are struggling with the financial impacts of these provisions.

Conclusion:

The introduction of H.R. 82, the Social Security Fairness Act of 2023, marks a crucial point in the ongoing debate over Social Security benefits for public sector workers. By eliminating the Windfall Elimination Provision and the Government Pension Offset, the bill would restore fairness and equity for millions of public employees who have spent their careers in service to their communities. As this bill progresses, it will likely remain a significant issue in discussions surrounding Social Security reform and the treatment of public sector employees.

President Joe Biden signed H.R. 82, the Social Security Fairness Act, into law on Sunday, January 5, 2025, at 3:00 p.m. Central Time Zone.

Tips for Tax Season

Tips for Tax SeasonWhether you file your income tax return early or at the last minute, there are ways to simplify the process and reduce what you owe – or even increase your refund – before the deadline.

Filing Simplification Tip

Once you receive your W-2 and/or 1099 tax forms, see what income tax bracket you fall under to determine whether you should itemize expenses or take the standard deduction. Thinking about this step first can save you a lot of time. If you don’t come near the standard deduction amount, you will not be itemizing expenses. And if you are not itemizing expenses, you won’t have to gather all the receipts (e.g., mortgage interest, property tax, state and local income taxes, and sales tax paid in 2024).  

2024 Tax Season Income Tax Brackets

 
Single filer Married filing separately Married filing jointly (includes qualifying widow/er) Head of Household Tax Rate

$0 to $11,600 

$0 to $11,600 

$0 to $23,200 

$0 to $16,550 

10%

$11,601 to $47,150 

$11,601 to $47,150 

$23,201 to $94,300 

$16,551 to $63,100 

12%

$47,151 to $100,525 

$47,151 to $100,525 

$94,301 to $201,050 

$63,101 to $100,500 

22%

$100,526 to $191,950 

$100,526 to $191,950 

$201,051 to $383,900 

$100,501 to $191,950 

24%

$191,951 to $243,725 

$191,951 to $243,725 

$383,901 to $487,450 

$191,951 to $243,700 

32%

$243,726 to $609,350 

$243,726 to $365,600 

$487,451 to $731,200 

$243,701 to $609,350 

35%

$609,351 or more 

$365,601 or more 

$731,201 or more 

$609,351 or more

37%

2024 Tax Season Standard Deductions

Single filer and married filing separately Married filing jointly (includes qualifying widow/er) Head of Household

$14,600

$29,200

$21,900

Retirement Saving Tips

It’s not too late to contribute to an IRA. Both the traditional and Roth IRAs allow you to make contributions for 2024 up until the tax-filing deadline of the following year – which this year is Tuesday, April 15. The advantage to this later deadline is that you can complete your taxes before they are due, then adjust them to reduce your tax liability if needed by contributing to your IRA. The total maximum contribution you can make to all of your IRAs combined (both Roths and traditional) is $7,000 for 2024 or $8,000 if you are 50 years or older.

However, if you have a Roth IRA, there are restrictions to contributions based on your 2024 income. You may make the maximum contribution to your Roth only if your 2024 modified adjusted gross income (MAGI) is less than a certain threshold.

Filing Status MAGI Contribution amount

Single and Head of Household filers

Below $146,000

Between $146,001 and 161,000

Above $161,000

$7,000/$8,000 (age 50+)

Phased (IRS Worksheet 2-2)

Nothing

Married filing jointly

(includes qualifying widow/er)

Below $230,000

Between $230,000 and $240,000

Above $240,000

$7,000/$8,000 (age 50+)

Phased (IRS Worksheet 2-2)

Nothing

Be aware that the amount of deduction you can claim for a traditional IRA contribution may be limited if you or your spouse are covered by a retirement plan at work.

Filing Status MAGI Deduction amount

Single and Head of Household filers

$77,000 or less

Between $77,000 and 87,000

$87,000 or more

Full deduction

Partial (IRS Worksheet 1-2)

None

Married filing jointly

(includes qualifying widow/er)

$123,000 or less

Between $123,000 and 143,000

$143,000 or more

Full deduction

Partial (IRS Worksheet 1-2)

None

Married filing separately

Less than $10,000

$10,000 or more

Partial (IRS Worksheet 1-2)

None

If you make a traditional and/or Roth IRA contribution by the April 15 deadline, you may qualify for the Retirement Saver’s Credit (also available if you contributed to an employer plan by Dec. 31, 2024). The maximum credit is $1,000 ($2,000 for married couples), and it can increase your refund or reduce the tax you owe. However, the saver’s credit is subject to other deductions, credits, and income restrictions.

Filing Status MAGI

Single and Married filing separately

up to $57,375

Married couples filing jointly

(includes qualifying widow/er)

up to $76,500

 

Head of Household Filers

up to $57,375

Work with an experienced tax preparer to take advantage of legitimate deductions and credits to ensure that you only pay what is required for your situation.

What is Innocent Spouse Relief?

What is Innocent Spouse Relief?The word “innocent” in innocent spouse relief can be misleading. It doesn’t imply you’re perfect or blameless – it’s more about whether you knew or should have known about the tax issue. The IRS defines “innocence” in a specific way, and it hinges on the concept of reasonable ignorance. In short, the issue isn’t one of morality; it’s about whether you could have reasonably been unaware of a tax problem.

Innocent spouse relief allows you to avoid being held responsible for tax debts, penalties, and interest stemming from a joint tax filing. In the case that a spouse (or ex-spouse) made an error that led to a tax issue, regardless of intention, you may not have to shoulder the burden. Say your income wasn’t reported, excessive deductions were claimed, or tax fraud was committed. If you meet the IRS criteria, you can request relief by submitting Form 8857.

Qualifications for Innocent Spouse Relief

To qualify, you must meet several conditions.

  • Joint Tax Return: The tax liability must arise from a joint return. When you file together, both spouses are equally responsible for any tax issues that arise.
  • Tax Underreporting: The tax issue must stem from underreported income or an incorrect claim for deductions or credits. This could involve unreported income (like from offshore accounts) or fraudulent deductions made by your spouse.
  • Lack of Knowledge: You must show that, at the time of filing, you were unaware of the problem and had no reason to suspect it.
  • Unfair Responsibility: Lastly, it must be deemed unjust to hold you liable. The IRS looks at factors such as whether you benefited from the underreported taxes (e.g., through extravagant spending) or if you’ve divorced.

What Doesn’t Qualify for Innocent Spouse Relief?

Not all cases involving a spouse’s financial mismanagement qualify for relief. The IRS may reject your claim in the following situations:

  • Awareness of the Mistake: If you knew about the issue or should have known, you won’t be eligible for relief. Simply stating that you didn’t read the return won’t suffice. The IRS expects you to recognize obvious errors if you have access to the relevant information.
  • Divorce Doesn’t Automatically Provide Relief: Divorce alone doesn’t eliminate your liability for tax debt. Joint returns create shared responsibility, and being separated or divorced doesn’t mean the IRS will automatically release you from this obligation. You must prove your innocence through the relief process.
  • Disagreements Over Personal Spending: If your spouse’s spending decisions are something you disagree with, the IRS will not consider it a tax issue unless it involves unreported income or fraudulent deductions. The IRS focuses on tax matters, not marital conflicts over financial choices.

Pros and Cons of Filing

Advantages include:

  • Avoid Financial Hardship: Tax liabilities, along with interest and penalties, can be overwhelming. Innocent spouse relief can protect you from these financial burdens.
  • Clear Your Name: If you’ve been unfairly tied to a tax issue you didn’t cause, the relief process can help remove you from the responsibility.
  • Peace of Mind: Successfully claiming relief can bring emotional relief, especially if you’ve gone through a challenging marriage.

Potential drawbacks are:

  • No Guarantee of Approval: The IRS does not grant relief easily. You’ll need to provide strong evidence, and the process can be lengthy and difficult.
  • Time Limitations: You generally must apply for relief within two years of the IRS starting collection efforts. Missing this deadline could result in losing the opportunity for relief.
  • Invasive Process: The IRS will closely examine your financial and personal life, including details about your marriage and finances, which could feel intrusive if you value your privacy.
  • Possible Strain on Relationships: If you’re still married, filing for relief could cause tension, as it might be seen as blaming your spouse for the tax issue.

Conclusion

To request innocent spouse relief, you’ll need to file Form 8857. Be prepared to provide details about the tax years involved, explain why you didn’t know about the issue, and any supporting documents (like bank statements, emails, or divorce decrees.

After submitting the form, the IRS will notify your spouse or ex-spouse, who will have a chance to respond by a specific date.

Tax Planning 2024

Tax Planning 2024Personal Income Tax Planning Strategies for Year-End 2024

As 2024 draws to a close, it’s the perfect time to review your personal income tax situation and implement strategies to minimize your tax liability for the year. Proactive year-end tax planning can lead to significant savings, as well as ensure that you take full advantage of tax credits, deductions and other opportunities available to you.

1. Maximize Contributions to Retirement Accounts

One of the most effective ways to reduce your taxable income is by contributing to tax-advantaged retirement accounts. In 2024, you may contribute up to $23,000 to a 401(k) or similar employer-sponsored plan, with an additional $7,500 catch-up contribution if you’re over age 50. These contributions are made pre-tax, meaning they reduce your taxable income for the year, potentially lowering your tax bill.

Similarly, if you’re eligible, consider contributing to an IRA. For 2024, the maximum contribution limit for a traditional IRA and/or Roth IRA is $7,000 ($8,000 if you’re 50 or older). Contributions to a traditional IRA may be tax-deductible depending on your income and whether you or your spouse are covered by an employer-sponsored retirement plan. If you’re not eligible for deductions due to income limits, consider a Roth IRA, where contributions are made after-tax, but qualified withdrawals in retirement are tax-free.

2. Take Advantage of Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs)

If your employer offers a Flexible Spending Account (FSA), use the remainder of your FSA funds before they expire. FSAs allow you to put away pre-tax money to cover medical expenses, and the limit for 2024 is $3,200. Depending on your employer’s plan, unused funds may be forfeited after the year-end, although some plans may offer a grace period or carryover option for a small portion of the balance.

For those eligible for a Health Savings Account (HSA), contributing the maximum allowable amount can provide immediate tax savings. For 2024, the HSA contribution limit is $4,150 for individuals and $8,300 for families, with an additional $1,000 catch-up contribution for individuals age 55 or older.

3. Harvest Capital Losses

If you’ve realized capital gains in 2024, it may be beneficial to offset those gains with capital losses. Known as tax-loss harvesting, this strategy involves selling investments that have declined in value to realize losses, which can be used to offset your capital gains. If your capital losses exceed your gains, you can use the remaining losses to offset up to $3,000 of ordinary income ($1,500 if married and filing separately).

Make sure to consider the “wash sale” rule, which disallows a deduction if you buy the same or substantially identical security within 30 days of selling at a loss. This rule is meant to prevent taxpayers from selling assets for tax benefits and then repurchasing the same assets immediately.

4. Bunch Charitable Contributions

If you’re planning to make charitable donations, consider bunching your contributions into one year to exceed the standard deduction threshold. This strategy allows you to itemize deductions for one year by making larger charitable contributions in a single year while taking the standard deduction in the following year. The standard deduction for 2024 is $29,200 for married couples filing jointly and $14,600 for single filers, which means if your itemized deductions do not exceed these amounts, you may benefit from grouping two or more years’ worth of charitable donations into one year.

5. Review Your Tax Withholding

As the year ends, review your tax withholding to ensure you’re not over- or under-paying throughout the year. If you’ve had a major life change in 2024, such as marriage, divorce, a child or a new job, adjusting your withholding can prevent underpayment penalties or a large tax bill. You can use the IRS Tax Withholding Estimator tool to assess whether your withholding is on track or, if necessary, submit a new Form W-4 to adjust your withholding for the final paychecks of the year.

6. Plan for Estimated Taxes if Self-Employed

For self-employed individuals, it’s important to ensure you’ve made sufficient estimated tax payments throughout the year. If you expect to owe additional taxes for 2024, you may want to increase your final estimated payment by Jan. 15, 2025, to avoid penalties. You can calculate your estimated tax liability using Form 1040-ES.

Conclusion

Tax planning is an essential part of personal finance. With 2024 coming to an end, it’s the right time to review your finances and take advantage of available tax-saving opportunities. By maximizing retirement account contributions, considering tax-loss harvesting and utilizing other year-end strategies, you can minimize your tax burden and keep more of your hard-earned income. Be sure to consult with a tax professional to tailor these strategies to your unique financial situation and ensure you’re in the best possible position for the year ahead.

Cybersecurity Best Practices for the Holiday Season

Cybersecurity The holiday season is when most people go on shopping sprees and travel. This season also witnesses a surge in online activities in today’s digital world. Unfortunately, cybercriminals take advantage of this period to launch attacks. Therefore, cybersecurity should be the top priority for a business gearing up for peak sales or a shopper looking for the best deal.

Understanding Holiday Cyber Threats

Businesses and consumers face unique challenges during the holiday season. For businesses, the increase in traffic and online transactions can overwhelm systems. This may make them vulnerable to attacks. Cybercriminals may use tactics such as ransomware, phishing scams and fraudulent transactions during the busy season. Consumers, on the other hand, get lured by malicious ads, fake websites and phishing emails that may appear as irresistible holiday deals.

Recognizing these risks is important to staying safe for both businesses and consumers. Understanding them also means taking proactive measures to reduce exposure to cyber threats.

Why Cybersecurity Matters

The lack of effective cybersecurity can lead to financial loss, reputational damage and disruption to a businesses’ operations. On the other hand, consumers face identity theft, unauthorized purchases and compromised financial accounts.

According to the Retail and Hospitality Information Sharing and Analysis Center (RH-ISAC), threats such as ransomware, phishing, and account takeover (ATO) attacks intensify as consumer activity surges. In their 2024 Holiday Season Cyber Threat Trends Report, RH-ISAC emphasizes proactive defense measures, especially during high-traffic periods like the holiday season.

Cybersecurity Best Practices for Businesses

Security measures for businesses include:

  • Set up a holiday strategy – over the long holidays, businesses tend to have a change in work schedules and fewer staff members. Having a holiday cybersecurity strategy can safeguard against potential cyber threats. This can include an emergency response plan and designating responsible individuals for cybersecurity.
  • Endpoint security – this involves protecting devices like computers and smartphones used in the business. It is important to update all software, install antivirus programs and enable firewalls to shield the business network from intrusions.
  • Employee training – human error is one of the leading causes of data breaches. Therefore, it is important to educate staff to recognize phishing attempts. They should also know the importance of strong passwords and reporting suspicious activity.
  • Monitoring systems for unusual activity – This requires a business to invest in tools that help detect suspicious behavior in its networks. This should include fraud detection systems that will help identify unusual transaction patterns. It also helps detect potential compromises from third-party vendors.
  • Backup and recovery plan – business continuity in case of an attack is crucial. Therefore, a business should ensure that data is regularly backed up and stored securely. It also helps to test the recovery process regularly.

Cybersecurity Best Practices for Shoppers

Consumers are not immune to holiday cyber-attacks. A consumer must keep the following in mind:

  • Shop from secure websites – shoppers should be cautious by checking website security. They should check that a website includes “https://” and a padlock icon in the URL. Also, confirm the correct name of the website. It is also important to avoid clicking on links from unsolicited emails or social media ads. This is a common phishing tactic.
  • Use secure payment methods – a credit card provides better fraud protection than a debit card. Consider digital wallets that have an extra layer of encryption. It is also crucial to avoid saving payment details on websites.
  • Avoid public wi-fi – shopping on the go may see some shoppers use public networks. These networks expose data to hackers.
  • Be wary of emails and messages with deals that sound too good to be true. Always verify sender authentication and, where necessary, contact the company directly.
  • Be cautious about unexpected package notifications. Unexpected package notifications can be a phishing tactic to steal personal information or install malware. Always verify the sender and avoid clicking on links in unsolicited messages.
  • Be cautious of holiday scams like fake charities, gift card scams and fake gift exchanges that prey on the season’s generosity and excitement. Scammers may trick customers into buying gift cards or sharing personal details through fraudulent schemes. Staying skeptical of unsolicited offers and never sharing sensitive information with unverified sources will help ward off cybercriminal attacks.
  • Activate multi-factor authentication (MFA) – adding MFA creates an extra layer of security for highly sensitive accounts such as email, bank, and work-related logins.

 Closing Thoughts

The holiday season is meant to be a time of celebration and connection, not worry and stress. By implementing robust cybersecurity practices, businesses can protect their operations and customers while shoppers enjoy safe, hassle-free transactions.

Pre-Retirement Planning Guide – Finding Purpose In Life

Pre-Retirement Planning Guide - Finding Purpose In LifeStep 7: Find Your Raison d’Etre

What do you consider to be your purpose in this world? Few people think about their life that way. In Japan, they call it your ikigai. In France, they refer to your raison d’etre. For Americans, that roughly translates to your purpose in life or your reason for being.

It’s easy to consider your family or even your career as your reason to live. But true embracement of the ikigai concept is more of a lifestyle, not a specific person, place or thing.

Your purpose may not even be something you’ve pursued in your adult life. Many of us follow the socially expected path: higher education, a good job, a rewarding career, marriage, home, and family. But those things are not everyone’s raison d’etre. They might wake up one morning thinking that once they’ve achieved all those goals, they will finally get the chance to do the one they’ve always wanted. What is that?

The older we get, the more we lose a spouse or life partner, siblings, or children – and those who retire no longer have work to feel fulfilled. As part of your retirement planning effort, consider life without any of those things. How would you bear it? If you outlive your career and loved ones, what would you do?

Note that your ikigai does not insulate you from bad things happening. Instead, it’s the thing you look forward to when the smoke clears: the light at the end of the tunnel. On balance, it’s the thing that helps get you through the pain and restores happiness. In fact, discovering your raison d’etre can help you better cope with stress and loss. People who pursue their ikigai tend to have better mental health, experience fewer chronic diseases, and are more likely to live longer.

Oftentimes ikigai is felt as part of a process. For example, the joy of mixing ingredients to prepare baked goods or a meal. Planting a garden. Rebuilding an engine. It can be the process of writing or painting or playing an instrument, but not necessarily finishing a novel or singing in public. It can be as simple as finding joy in daily activities, nurturing relationships or doing community service.

Another advantage to ikigai is that it can connect you with other people who share your passion, which can be very important as you grow older and more isolated. By leaning into your ikigai, you could expand your social network with connections that are meaningful and fulfilling.

For some people, their raison d’etre is spiritual. A belief and perhaps a greater connection to a higher being. They may wish to spend more time becoming involved in church activities, reading scripture that supports their religion, or even exploring other religions.

The Japanese culture believes that each individual has an inherent ikigai based on their personal values and beliefs. One way to think about it is as your philosophy on life. Since this step is a part of retirement planning, it is fortunate that you have lived long enough to have developed some philosophies on life.

For example, some people discover that family does not just consist of blood relatives. Instead, their concept of family is people who are there through good and bad times, who always show love and respect, who you can rely on. Those things might not always be true among family members who meet the traditional definition. This type of ikigai may help you recognize that the death of loved ones does not necessarily mean you lose your family. You can always build and add to your family (e.g., neighbors and friends, fostering children or pets, big brother/big sister programs).

How Do You Find Your Ikigai??

Many times, the hustle and bustle of life keeps us from finding our true purpose. We proceed as loyal soldiers down a path prescribed by society instead of pursuing things that may bring us greater happiness. There’s nothing wrong with a career and family, but there is likely something more that each of us can pursue that is personal and soul-enriching. Sometimes, you can discover your raison d’etre by exploring your passions, values, strengths, and skills. For example, ask yourself the following questions:

  • When I was a child, I loved doing…
  • If money didn’t matter, I would be…
  • If I believed I could not fail, I would…
  • I completely lose track of time when I am…
  • I am most happy with who I am when I…
  • I am really good at…
  • If I didn’t care what others thought, I would…
  • In my free time, I love to…
  • If I had only six months to live, I would spend my time…
  • If I were to die tomorrow, I would regret that I did not…

Consider hobbies or classes that you’ve always wanted to try or past experiences or achievements that gave you a sense of satisfaction and fulfillment. Recall where you have found inspiration in the past, and pinpoint what lies at the cross-section of doing what you love and doing what you’re good at.

Remember that your reason for living is more of a journey, not a destination. Finding your ikigai may take a lifetime to discover, so don’t be afraid to try out different pursuits. In fact, your reason for being may simply be to try new things.

 

5 New Year’s Financial Resolutions You Can Actually Keep

5 New Year's Financial ResolutionsYep, it’s the end of another year! Chances are, you didn’t keep every resolution you made last year, for example, those goals about working out. (No shame here; we all do this!) However, the good news is that your fiscal goals can be a bit easier to achieve. Here are a few financial resolutions that are no-brainers, simple, and, best of all, no sweat.

Get a snapshot of your net worth. This is critical. Sit down and calculate this. When you know how much you have in terms of assets and liabilities, you can more easily determine where you need to make changes to your budget. For instance, this might be spending less on dining out and stocking more away in savings and investments. Understanding how much you have to work with is the first step to reaching your goals.

Pay off credit cards. This might well be an ongoing task, but the end of the year is a great time to take a breath, make a plan, and hit the ground running in the new year. If you have high-interest cards, look for limited-time, lower-interest and/or zero-interest cards. Some lenders will even give you as long as 21 months without interest. If you find yourself using credit cards more than you like, another way to get a handle on this is to use cash when you’re out at stores and restaurants. Seeing the dollars actually leaving your hands as opposed to just swiping your plastic might give you a needed dose of reality.

Update your savings goals. If you want to easily increase your savings, choose an amount and have it auto-drafted from your paycheck or checking account into your savings every month. This way, you’ll learn to live on the amount you have left. When you never see the amount you’re tucking away, you won’t miss it.

Review and reset your investments. Take some time to pull together all your assets: IRAs, retirement accounts, and employer 401(k) plans. If you can contribute more to any of these, all the better. For 401(k)s, the IRS just announced a cost-of-living adjustment for retirement plans and IRAs – the 401(k) contribution limit for 2025 is $23,500, up from $23,000 in 2024. However, individual retirement account (IRA) contributions will continue to be $7,000 in 2025, the same as in 2024. If you’re over 50, here’s some good news: You’ll be able to make even larger catch-up contributions than other workers because of a provision in Secure 2.0, a federal retirement law. Beginning in 2025, employees aged 60, 61, 62, or 63 who participate in workplace retirement plans can make catch-up contributions of up to $11,250.

Take a look at your credit report. This is key. You’re entitled to one free credit report a year from each of the three credit agencies, so doing this is easy peasy. Pull up your report and give it a look-see. If you see anything negative, take action to repair it. If there are any errors, correct them asap. To get started, go to AnnualCreditReport.com.

While there are many other money-related resolutions you can make, starting with ones that take minimal effort while yielding maximum results is a good place to begin, not to mention, a great way ease into the new year.

Sources

https://www.investopedia.com/articles/pf/06/newyear.asp

https://www.investopedia.com/the-irs-revealed-2025-changes-to-retirement-401k-and-ira-contributions-8738507

Energy Tax Credit Changes For 2025

Energy Tax Credit Changes For 2025The coming shakeup of the executive branch, along with Republican control of both houses of Congress, means tax changes are highly likely in 2025 and beyond. Positioning for new and amended tax provisions is already off to the races.

Regardless of the political landscape, on rare occasions, some measures have broad bipartisan support. One such bill is called the Methane Reduction and Economic Growth Act. It proposes adding a new credit for sequestering “qualified” methane from mining activities.

Looking Ahead To 2025

Proponents of the Methane Reduction and Economic Growth Act hope the tax credit will have a beneficial economic impact and create jobs. The idea is to capture and utilize the methane for productive industrial uses or as an alternative for heating buildings. The methane emitted by mines that qualify have long lifespans, with some abandoned mines emitting methane for up to 100 years. The long lifespan of the methane source is hoped to support the significant capital investment required to get the process up and running.

There is also significant potential for job creation in areas most impacted by the shutdown of coal-fired power plants, which in turn devastated the coal mining industry. The concept of using mine methane as an energy source could support rural American jobs.

Landscape and Potential for the Credit

There is a lot of mine methane to capture, with most not currently being captured. The U.S. government estimates abandoned coal mines produce about 237,000 metric tons annually. This methane has many potential uses, including hydrogen production.

Details on the New Subsection

The new section of 45Q credits would be based on the quantity of qualified methane that is sequestered. The captured methane must then be sent to the pipeline and used for producing heat or electricity. To be considered “qualified methane,” it must be captured from certain types of mines, including closed, abandoned, and surface mines. Finally, the methane captured must have otherwise been sent into the atmosphere if it had not been for the capture equipment activity.

Only qualified facilities may obtain the credit. Among other factors, the taxpayer needs to capture a minimum of 2,500 metric tons of methane each year to qualify. There are a lot more technical regulatory requirements related to the specific nature of methane capture, but those are beyond the scope of this article.

Conclusion

Typically, tax bills are split down the aisle based on political partisanship. This makes the passage of tax legislation difficult at best due to competing interests and a divided government. The tax credits related to methane capture, however, appear to be unusually bipartisan in nature. This is due to the unique intersection of democratic support from an environmental and climate perspective, meeting with Republican interest to support economic development in rural coal mining areas where the industry has been devastated. Put these two interests together, and you have the makings for a widely supported bipartisan bill that is very likely to pass.

Making Pensions Equitable, Protecting Foster Kids, Mail-in Votes and Tracking Government Spending

Making Pensions Equitable, Protecting Foster Kids, Mail-in Votes and Tracking Government SpendingAll bills not enacted by the end of the 118th congressional session on Jan. 3, 2025, will expire.

Social Security Fairness Act of 2023 (HR 82) – This bill, with 330 bipartisan sponsors and a similar bill in the Senate, was introduced by Rep. Garret Graves (R-LA) on Jan. 9, 2023. It passed in the House on Nov. 12 of this year and is likely to pass in the Senate before the year’s end. The purpose of the bill is to eliminate the government pension offset that reduces Social Security benefits for individuals who receive other benefits, such as a pension from a state or local government. In the private sector, this would have a similar effect to withholding Social Security from people who have a 401(k). The bill would also repeal provisions that reduce Social Security benefits for spouses and widows/ers who receive their own government pensions. The provisions of the bill would be retroactive to the beginning of 2024.

BOLIVAR Act (HR 825) – This legislation prohibits the head of an executive agency to enter into a contract for the procurement of goods or services with any person that has business operations with the Maduro regime in Venezuela. The act was introduced on Feb. 2, 2023, by Rep. Michael Waltz (R-OH). It passed in the House on Nov. 18, and its fate currently lies with the Senate.

Vote by Mail Tracking Act (HR 5658) – This bill would require mail-in ballots to use the Postal Service barcode and an Official Election Mail logo. It passed in the House on Nov. 18 and is under consideration in the Senate. The bill was introduced by Rep. Katie Porter (D-CA) on Sept. 21, 2023.

Find and Protect Foster Youth Act (S 1146) – This act was introduced on March 30, 2023, by Sen. John Cornyn (R-TX). It would amend a provision of the Social Security Act to require the Department of Health and Human Services to eliminate obstacles to identifying and responding to reports of missing foster care children. Furthermore, it would assist in the assessment and screening of children who are at risk of becoming victims of sex trafficking, as well as identify best practices for effective interventions. The bipartisan bill passed in the House on Nov. 18 and is currently in the Senate.

Billion Dollar Boondoggle Act of 2023 (S 1228) – This bill was introduced by Sen. Joni Ernst (R-IA) on April 25, 2023. The bill would require the director of the Office of Management and Budget to submit an annual report to Congress detailing projects that are over budget and behind schedule. This is a bipartisan bill that has passed in both the Senate and the House, but on July 22, the House made changes and sent it back to the Senate, where it currently resides.

Rural Broadband Protection Act of 2024 (S 275) – Introduced by Sen. Shelley Moore Capito (R-WV) on Feb. 7, 2023, this bill would require the Federal Communications Commission (FCC) to vet applicants for funding of affordable broadband deployment in high-cost areas (including rural communities). The FCC would mandate a process, including a detailed proposal with technical capabilities to provide competitive awards for implementing the broadband network services. The FCC would then assess proposals in line with well-established technical standards. The bill passed the Senate on Sept. 25 and is currently with the House.

Common Business Accounting Calculations

Common Business Accounting CalculationsNo matter the type of business or industry, being able to analyze and deduce patterns is essential to discovering a business’ financial health. Here are four commonly used calculations to help internal and external stakeholders determine an organization’s ability to manage its finances.

Break-Even Analysis

This formula analyzes fixed costs versus the profitability a business earns for every extra item it creates and sells.

Businesses that have smaller thresholds to meet their fixed costs to realize profitability have an easier break-even point to meet and exceed. Once the fixed costs threshold is satisfied and sales revenue outpaces variable costs, a business will know when it hits the break-even point.

Break Even Point (BEP) = Total Fixed Costs/(Price Per Unit – Variable Cost Per Unit)

This takes the total fixed costs divided by the price per individual unit minus each unit’s variable cost.

Examples of fixed costs are rent, taxes, insurance and wages. Examples of variable costs are raw materials, production supplies, utilities and packaging.

Another way to determine a company’s break-even point is as follows:

Contribution Margin = Item Price – Variable Cost Per Unit

This is illustrated by: $55 = ($85 – $30)

The item’s priced at $85, with a variable cost of $30, the contribution margin is $55 of how much revenue a company earns to pay for the remaining fixed costs.

Cash Ratio Formula

The cash ratio formula offers one way to look at a company’s liquidity position by comparing a company’s cash and cash equivalents to its current liabilities or debts due within the next 12 months. It shows how well positioned a business is (or is not) able to pay debts due within 12 months, and to satisfy the near-term obligations of its long-term debt.

It’s an important ratio that lenders look at when evaluating a company’s loan application. Instead of including assets such as accounts receivables, it factors in a business’ ability to take care of its financial obligations. It’s thought of as being a more real world look at how financially stable a business is.

It’s calculated as follows: Cash Ratio: Cash + Cash Equivalents/Current Liabilities.

Gross Profit Margin

This is defined as all income minus the cost of goods sold (COGS). COGS is comprised of expenses attributable to the creation of products, which include input materials and salaries for workers to produce such goods. However, it excludes expenses for taxes, overhead, debt, asset acquisitions, etc., among others. Another way to explain this calculation is to ask how much a business retains as profit once production costs are accounted for.

It’s calculated as follows: Gross Profit Margin = [(Net Sales – Cost of Goods Sold)/(New Sales)] x 100

Debt-to-Equity (D/E) Ratio

This is used to determine how much debt or financial leverage a company has on its books. It tells internal stakeholders and external parties what percentage of debt a company is using to operate compared to the business’ available operating reserves. This ratio contrasts a business’ complete financial obligations against its shareholder equity. Its primary use is to see how extensively it uses debt to operate.

It’s calculated as follows: Debt/Equity Ratio = Total Liabilities/Total Shareholders’ Equity.

While these calculations may seem straightforward, these are only a few examples of how businesses can calculate and analyze a company’s position – be it the owner, an employee or an outside lender or investor.