Optimize Your 2024 Tax

As the year draws to a close, it’s crucial to take proactive steps to optimize your tax situation and potentially reduce your tax liability. Here’s a detailed checklist of actionable items to consider for effective year-end tax planning:

1. Maximize Retirement Contribution

• 401(k): Contribute up to $23,000 ($7,500 extra if 50+).
• IRA: Contribute $7,000 ($8,000 if 50+); tax deductibility depends on income and employer plans.

2. Boost Health Savings Accounts (HSA)

• Limits: $4,150 (individuals), $8,300 (families), +$1,000 catch-up if 55+.
• Triple Tax Benefit: Contributions, growth, and qualified withdrawals are tax-free.

3. Take Required Minimum Distributions (RMDs)

• Traditional IRA or Inherited IRA: If you're 73 or older, ensure you've completed your RMD to avoid penalties.

4. Tax Loss Harvesting

• Offset gains by selling underperforming investments. Avoid the wash sale rule.

5. Review Deductions

• Compare standard vs. itemized deductions. Use strategies like bunching deductions for greater tax benefits.

6. Education Savings with 529 Plans

• Contributions grow tax-free; qualified withdrawals are tax-free. Check for state tax benefits on contributions.

7.  Charitable Donations

• Ensure donations go to IRS-recognized charities.
• Itemize deductions to maximize benefits; consider donating appreciated securities.

8. Use Flexible Spending Accounts (FSA)

• Spend unused funds before deadlines or check for grace periods/carryovers.

Consult a tax professional to personalize these strategies and prepare for 2025. Proactive planning ensures compliance, reduces liability, and aligns with your financial goals.