Year-end tax planning for 2024 involves strategies to maximize deductions, credits, and other opportunities while aligning with changes to tax laws. Here are some relevant areas to focus on:

1. Maximizing Retirement Contributions

  • 401(k): Contribute up to the limit ($22,500 for those under 50, $30,000 for those 50+ in 2024).
  • IRAs: Consider contributing the maximum ($6,500 or $7,500 if 50+) and possibly converting a traditional IRA to a Roth IRA if you’re in a lower tax bracket.
  • SEP-IRA or Solo 401(k): If self-employed, maximize contributions based on your income.

2. Take Advantage of Tax Credits

  • Clean Energy Tax Credits: Look into credits for energy-efficient home improvements, electric vehicles, or solar panels, especially given the expanded incentives under the Inflation Reduction Act.
  • Child Tax Credit: Verify eligibility, especially if your income or dependents changed.
  • Education Credits: The American Opportunity Tax Credit (AOTC) or Lifetime Learning Credit could apply if you’re paying for education expenses.

3. Review Tax-Loss Harvesting

  • Offset capital gains with losses by selling underperforming investments.
  • Be mindful of the wash-sale rule (you can’t repurchase the same or substantially identical securities within 30 days).

4. Bunch Deductions

  • If you’re close to the standard deduction limit ($13,850 single, $27,700 married filing jointly in 2024), consider “bunching” deductions like charitable donations or medical expenses into 2024.

5. Defer Income or Accelerate Expenses

  • If you’re self-employed or a small business owner, defer income into 2025 or accelerate deductible expenses into 2024 to reduce taxable income.
  • Consider bonus depreciation or Section 179 deductions for business equipment.

6. Review Tax Withholding

  • Check your withholding and make adjustments to avoid penalties or a surprise tax bill.
  • If you’ve had significant life changes, update your W-4 or make estimated tax payments.

7. Take Advantage of HSA or FSA

  • Contribute to the maximum in a Health Savings Account (HSA) or Flexible Spending Account (FSA) to save on medical expenses. HSA contributions for 2024 are $4,150 (individual) or $8,300 (family).

8. Real Estate and Homeowners

  • If you’re remodeling your home, look into the potential tax benefits of energy-efficient upgrades, which may qualify for credits.
  • For rental properties, maximize depreciation and other deductions.

9. Stay Updated on Tax Law Changes

  • Stay informed about potential sunset provisions in the 2017 Tax Cuts and Jobs Act (TCJA) scheduled for 2025. Consider strategies now for anticipated changes.

10. Work with a Professional

  • A CPA or tax advisor can help you identify deductions or opportunities specific to your situation, including evaluating business taxes, estate planning, or trusts.

Would you like tailored advice for your personal or business taxes? Give us a call at Bellevue (206) 838-3800 or Duvall (425) 788-1544.

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