Things I'm Grateful for as a CPA This Year

Reflecting on Gratitude: A CPA's Perspective

As the leaves turn and the air becomes crisp, it's the time of year when many of us take a step back to reflect on what we're grateful for. As a CPA, this season of gratitude extends to the tools and provisions that make a tangible difference in my clients' financial lives. These tools not only help my clients save money and plan ahead but also provide peace of mind during tax season. I'm thankful for so much, but I'll share the top four things on my list this year.

1. The Generosity of the Standard Deduction

One of the things I'm incredibly grateful for is the simplicity and generosity of the standard deduction. For single filers, it stands at $15,750; for married couples filing jointly, it's $31,500; and for heads of household, it's $23,625. These amounts provide a straightforward choice for many who may not have itemized deductions exceeding these thresholds. For instance, I had a client, a single parent, who was worried about itemizing every little expense. Opting for the standard deduction instead simplified her life immensely and maximized her tax advantage.

2. The Strategic Power of Retirement Account Contributions

Retirement savings plans are a godsend – and I'm thankful for the opportunities they present. The IRA allows contributions up to $7,000 (or $8,000 if you're aged 50 or above), while the 401(k) maxes out at $23,500 (with a jump to $31,000 for those 50+). Looking ahead, there's an enhanced catch-up rule from ages 60 to 63 starting in 2025. I often help clients, like a married couple in their early 50s, decide between Traditional and Roth contributions. Their choice can be pivotal, whether they're looking to reduce taxable income now or enjoy tax-free withdrawals in retirement.

3. Embracing the Health Savings Account (HSA) Advantage

HSAs are a treasure trove for those eligible. Individuals with single coverage can save $4,300 tax-free, while families can contribute $8,550, plus an extra $1,000 if you're 55 or older. Besides the upfront tax deductible contributions, the HSA's triple tax advantage is unmatched—tax-free growth and withdrawals for qualified medical expenses. I once walked a young entrepreneur through setting up an HSA, which she later used for a surprise surgery—turning what could've been a financial setback into a smoother recovery, aided by tax benefits.

4. The Valuable Child Tax Credit (CTC)

Finally, I'm grateful for the Child Tax Credit, which can be a lifesaver for families. Its benefits reach up to $2,200 per qualifying child under 17, with $1,700 potentially refundable. While phase-out thresholds are $200,000 for single filers or $400,000 for joint filers, many families still benefit. Recently, a family I work with was able to better fund their child's education savings plan thanks to this credit. This Thanksgiving season, take a moment to review these opportunities and think about how they could benefit you before the year ends. And remember, I’m always here to help if you want to explore any of these options in more depth. Here's to making tax season a little less taxing and a lot more rewarding!