2024 Year-End Planning—Last-Minute Checklist

As a new year approaches, individuals should review the following checklist of action items before the start of 2025.

Corporate Transparency Act (CTA)-Status 

The Corporate Transparency Act (CTA) requires the filing of reports that disclose the beneficial owners of most corporations, LLCs, limited partnerships and similar entities to the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN). The filing deadlines were set as (i) Jan. 1, 2025, for entities in existence before Jan. 1, 2024, (ii) within 90 days of creation for entities created in 2024 and (iii) within 30 days of creation for entities created in 2025 or after.

On Dec. 3, 2024, a U.S. district court entered a nationwide preliminary injunction in a ruling that held that (i) the CTA may not be enforced and (ii) entities do not need to comply with the CTA’s reporting deadlines pending a further court order. On Dec. 6, FinCEN released a statement confirming that entities are neither currently required to file beneficial ownership reports nor subject to liability for failure to do so while the order remains in force, but that entities may continue to voluntarily submit the reports. FinCEN has appealed the injunction.

Loeb & Loeb continues to monitor this developing situation. Please contact us with any questions regarding the CTA injunction and the status of your entities.

Gift and Estate Tax Planning

Use (or Forfeit) 2024 Annual Exclusion Gifts. In 2024, individuals can give up to $18,000 each to an unlimited number of recipients without reducing their federal lifetime gift tax exemptions, paying gift tax or filing a federal gift tax return. Married couples can give up to $36,000 per recipient by electing to “split” gifts on a gift tax return. Any unused 2024 annual exclusions will not carry over into 2025, so gifts of these amounts must be completed before year-end. Note that gifts made by check must be deposited by the recipient before year-end to qualify for the 2024 annual exclusion. 

Review Your Estate Plan. Make a note on your 2025 to-do list to review your current estate plan (wills, revocable trusts, powers of attorney, etc.) with your Loeb attorney to ensure that it still aligns with your intentions and provides the optimum planning given your current financial and personal situation. 

Consider Planning With Higher Gift and GST Tax Exemptions. Each U.S. individual has a federal gift and estate tax exemption, and an equivalent amount of generation-skipping transfer (GST) tax exemption, equal to $13.61 million in 2024, with an increase to $13.99 million in 2025. The current exemption amounts were enacted as part of the 2017 tax legislation, which doubled the exemptions from $5 million to $10 million per individual, as indexed for inflation. Legislative action will be required to extend these higher exemption amounts beyond 2025. Individuals with sufficient assets and a desire to make lifetime gifts may want to plan for the use of these higher gift and GST exemptions now, including making gifts to irrevocable dynasty trusts, which can defer estate taxes on the trust assets for multiple generations. 

Charitable and Income Tax Planning

Manage Capital Gains Tax Liabilities. To mitigate potential capital gains taxes, individuals should review their portfolios for potential capital loss harvesting opportunities or their ability to accelerate capital gains to absorb any losses that were realized this year. Securities must be sold by Dec. 31, 2024, the last trading day of the year, to realize any capital gains or losses. Note that the asset holding period for tax purposes (i.e., long term or short term) is determined on the trade date (when you initiate the buy or sell order) rather than its settlement date. Also be mindful of the wash-sale rules, which disallow a tax loss on the sale of a security if a “substantially identical” security is repurchased within a 30-day window before or after the sale.

Bundle Charitable Gifts and Other Deductions. Individuals who make regular charitable gifts may want to optimize their potential charitable deductions by bundling donations into a year when they expect to have a high tax liability. Potential donors should factor in the charitable deduction limitations that may apply based on adjusted gross income (AGI) for the year, the type of charity (public or private) and the asset given (cash, appreciated stock, etc.). A five-year carry forward applies for charitable contributions that are not currently deductible due to AGI limitations. To take a deduction in 2024, donors also should ensure that the donation is deemed made no later than Dec. 31, 2024. Different dating rules apply depending on how the gifts are made and delivered (e.g., by check, credit card or cash wire, or through an in-kind donation, such as with securities).

Individuals also may wish to bunch itemized deductions (like medical costs and certain interest expenses) into this year, depending on their tax outlook for 2024 and 2025. 

Further guidance will be issued to address the omission of owners born in 1959. Account holders should revisit their retirement planning early next year to confirm their RMD required beginning dates based on these new rules. 

Consider Qualified Charitable Distributions (QCDs). In 2024, owners of inherited or traditional IRAs who are age 70½ or older can make tax-free direct transfers of up to $105,000 to qualifying public charities. These qualifying charitable distributions (QCDs) are not taxable income to the IRA owner but may count toward satisfaction of the owner’s 2024 RMD, if any. QCDs for this year must be completed by Dec. 31, 2024, so IRA owners should contact their IRA trustees as soon as possible to confirm if desired QCDs can be made within this time frame. 

• Unified Gift and Estate Tax Exemption: For gifts made and estates of decedents dying in 2025, the exemption amount increases to $13.99 million (up from $13.61 million in 2024).

• GST Tax Exemption: The GST tax exemption also increases to $13.99 million in 2025 for generation-skipping transfers (up from $13.61 million in 2024). 

• Gift Tax Annual Exclusion: The gift tax annual exclusion increases to $19,000 for gifts made in 2025 (up from $18,000 in 2024).

• Annual Exclusion for Gifts to Non-U.S. Citizen Spouses: For 2025 gifts made to non-U.S. citizen spouses, the annual exclusion increases to $190,000 (up from $185,000 in 2024).  

Income Taxes 

• Income Tax Brackets. The 2025 tax brackets for individuals as well as trusts and estates also have been adjusted upward. 

• Married Joint Filers: The top tax rate of 37% applies to taxable income over $751,600 in 2025 (up from $731,200 in 2024).

• Single Filers: The top tax rate of 37% applies to taxable income over $626,350 in 2025 (up from $609,350 in 2024).

• Trusts and Estates: Trusts and estates have a far more compressed tax bracket, and the top tax rate of 37% applies to taxable income over $15,650 in 2025 (up from $15,200 in 2024).

• Capital Gains Thresholds. Below are the increased thresholds for application of the 15% capital gains tax rate. The 20% capital gains tax rate applies to adjusted net capital gains in excess of the 15% maximum amounts.

• Married Joint Filers: The 15% capital gains tax rate applies to adjusted capital gains of more than $96,700 and up to $600,050 (up from $94,050 and up to $583,750 in 2024).

• Single Filers: The 15% capital gains tax rate applies to adjusted capital gains of more than $48,350 and up to $533,400 (up from $47,025 and up to $518,900 in 2024).

• Trusts and Estates: The 15% capital gains tax rate applies to adjusted capital gains of more than $3,250 and up to $15,900 (up from $3,150 and up to $15,450 in 2024).

The above are subject to change if Congress enacts any modifications to current income or transfer tax laws. As always, you should contact your Loeb estate planning attorney for advice before taking any tax planning actions.