As we enter 2024, California businesses must stay informed about the latest changes in tax regulations and financial thresholds. Hillberg & Co. CPAs are here to guide you through these updates, ensuring your business remains compliant and financially savvy.
Mandatory Electronic Filing for W-2s and 1099s:
Starting January 2024, the IRS mandates electronic filing for businesses issuing ten or more informational returns, including Forms W-2 and 1099. This is a significant reduction from the previous 250 paper return threshold. We recommend initiating the registration process immediately to avoid any last-minute hassles. It takes about two weeks to complete this process, so act fast to meet the January deadline.
Increased 401(k) and IRA Contribution Limits:
The year 2024 brings good news for retirement savers. The 401(k) contribution limit has been raised to $23,000, while the IRA limit is now $7,000. These increases reflect the IRS’s adjustments for inflation, providing an excellent opportunity for employees to boost their retirement savings.
Income Ranges for IRA Deductibility Adjusted:
The income phase-out ranges for IRA contributions have also been updated. For single taxpayers covered by a workplace retirement plan, the range is between $77,000 and $87,000. For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace plan, the range is $123,000 to $143,000.
Removal of SDI Wage Limit in California:
Significant for California businesses, the State Disability Insurance (SDI) rate for 2024 is 1.1%, with the notable removal of the maximum wage base. This change, effective from January 1, 2024, means there’s no cap on the taxable wages for SDI contributions.
Adjustments in Roth IRA and Saver’s Credit Income Ranges:
Roth IRA contributors will see the income phase-out range increased, ensuring more individuals can benefit from this retirement savings vehicle. Similarly, the income limit for the Saver’s Credit has been raised, encouraging low- to moderate-income workers to save for retirement.
These changes reflect an evolving financial landscape, emphasizing electronic efficiency and increased opportunities for retirement savings. As your trusted CPA advisors, we’re here to help you navigate these updates. Contact us for personalized advice and strategies to optimize your financial planning in 2024.