While many uncertainties loom for 2024, one thing remains inevitable: paying taxes.
Recent changes to tax laws may have significant implications for affluent individuals like surgeons.
This article will provide up-to-date tax data and changes, offer estate planning tips, and share tax-effective investment and wealth management strategies to help surgeons like you maintain and grow your financial health in light of the 2024 tax changes.
With over 200 years of collective experience in private wealth management, the Surgeons Capital Management team specializes in serving surgeons, their families, and surgical practices.
Overview of 2024 Key Tax Changes
Understanding the updated 2024 tax figures will assist you in managing your finances wisely in the upcoming year.
Tax Brackets
The income tax brackets for individuals in 2024 have expanded due to inflation, while tax rates remain the same.
Capital Gains and Qualified Dividends
Long-term capital gains and qualified dividends maintain favorable tax rates in 2024. Income thresholds to qualify for tax rates increased.
Single:
- 0% rate: Taxable income up to $47,025
- 15% rate: Taxable income $47,026 to $518,900
- 20% rate: Taxable income over $518,900
Married filing jointly:
- 0% rate: Taxable income up to $94,050
- 15% rate: Taxable income $94,051 to $583,750
- 20% rate: Taxable income over $583,750
Married filing separately:
- 0% rate: Taxable income up to $47,025
- 15% rate: Taxable income $47,026 to $291,850
- 20% rate: Taxable income over $291,850
Head of household:
- 0% rate: Taxable income up to $63,000
- 15% rate: Taxable income $63,001 to $551,350
- 20% rate: Taxable income over $551,350
Alternative Minimum Tax
The 2024 AMT exemption is $85,700, starting to phase out at $609,350 ($133,300 for married couples filing jointly, phasing out at $1,218,700).
In contrast, the 2023 exemption was $81,300, phasing out at $578,150 ($126,500 for married couples filing jointly, phasing out at $1,156,300).
Estate and Legacy Planning Adjustments
Updates in the 2024 tax laws should motivate you to review your estate plan and ensure it aligns with the latest regulations and your long-term financial goals.
Here are some new figures and estate planning tips:
Estate and Gift Tax Exclusion
In 2024, the exemption amount for individuals passing away is $13.61 million, increased from $12.92 million in 2023.
Married couples can now benefit from a combined exemption of $27.22 million.
The annual gift tax exclusion for 2024 is $18,000 per donor. That means in 2024, you can gift up to $18,000 ($36,000 if married) to each child, grandchild, or any other person without having to file a gift tax return or tap your lifetime estate and gift tax exemption.
Annual gifts exceeding the exclusion amount may require filing a gift tax return for 2024.
However, due to the high $13.61 million lifetime estate and gift tax exemption for 2024 (doubled for married couples), no gift tax will be due if your total lifetime gifts exceed $13,610,000.
As a surgeon, you can benefit from different estate planning strategies to lessen the potential effect of the 2024 tax laws.
Here are a few common legacy-building strategies:
- Charitable Lead Trusts (CLTs): A CLT provides an income stream to charitable organizations for a period before assets pass to heirs.
- Charitable Remainder Trusts (CRTs): A CRT offers donors or other beneficiaries an income stream before assets go to charitable organizations.
- Donor-advised fund: You can donate to your preferred charities and may get tax benefits through donor-advised funds. These funds are managed by a third party to handle charitable contributions for organizations, families, or individuals.
Tax-Efficient Investment and Wealth Management Strategies
Surgeons looking to lower taxes in 2024 should check out these smart investment and wealth management strategies to help you manage your money better.
Here are some tactics that can reduce the 2024 tax burden:
Tax-Efficient Investment Strategies:
- Tax-loss harvesting: Selling investments at a loss to offset capital gains in other portfolio parts. This strategy may reduce capital gains taxes and improve the efficiency of your portfolio.
- Holding periods: Holding investments for over a year qualifies for lower long-term capital gains tax rates than short-term rates for investments held for less than a year.
- Municipal bonds: Interest from these bonds is usually tax-exempt at the federal level and sometimes at the state and local levels, making them appealing to high-tax bracket investors.
- Tax-managed funds: Some mutual funds or ETFs are specifically designed to minimize taxable distributions through strategies like tax-loss harvesting and carefully selecting securities.
Tax-Efficient Wealth Management:
- Asset location: Placing investments in the most tax-advantageous accounts (taxable, tax-deferred, or tax-exempt) based on their tax treatment, for example, holding high-yield investments in tax-deferred accounts to defer taxes on income.
- Maximizing retirement contributions: In 2024, IRA contributions can go up to $7,000 and 401(k) contributions up to $23,000. Individuals over 50 can make catch-up contributions, allowing IRA contributions up to $8,000 and 401(k) contributions up to $30,500.
- HSAs: In 2024, those under a high deductible health plan (HDHP) will see the HSA contribution limit set at $4,150 for individuals and $8,300 for family coverage. These figures represent approximately a 7% rise from the previous year’s contribution limits.
By incorporating these wealth-building strategies and investments into your financial plan, especially as someone in a higher tax bracket, you can decrease your tax liabilities while increasing your assets.
About Surgeons Capital Management
To fully capitalize on the benefits of the new 2024 tax laws, surgeons should consider partnering with a firm specializing in wealth management for surgeons.
At Surgeons Capital Management, our financial advisors in high net worth management specialize in serving you by prioritizing your financial goals above all else.
Our core values include:
- Always acting in your best interest
- Getting to know you personally
- Aiming to be the top financial services provider for successful surgeons
- Maintaining integrity and respect
- Working closely with you to address complex financial issues
Recognizing your demands, our team of leading financial advisors for surgeons is committed to making it easier for you to handle the day-to-day details of building, protecting, and passing on your wealth to future generations and charitable causes. Let us do the heavy lifting for you. Contact us today!
