Week 38: Reduce Expenses, Tactic 10

What can you do this week?

• Do a tax projection now to see where you stand. Use this calculator.

• Look at what deductions, credits, or other tax savings tactics can be acted upon before December 31st to save on taxes due 4/15.

Do A Tax Projection

• Be proactive and estimate your future tax liabilities.

• Consider your current financial information, anticipated income, future deductions and credits, and the myriads of tax laws that change over time.

• This calculator makes this process simple.

  

  Check Deductions & Credits Still Available

• Health Savings Account: If covered by a high deductible health plan, contribute until 4/15/25.

  1. The maximum contributions are $4,150 for individuals and $8,300 for families.

  2. If you are 55 or older, you can add up to $1,000 more as a catch-up contribution.

  3. HSAs have no use-it-or-lose-it provision. Any funds still in the plan at the end of the year can be rolled over indefinitely.

• Child Tax Credit: Available for qualifying dependents under a certain age. How much is the 2024 child tax credit?

  The maximum tax credit available per child is $2,000 for each child under 17 on Dec. 31, 2024. Only a portion is refundable this year, up to $1,600 per child. Check qualifications here.

• Earned Income Tax Credit (EITC): Designed to assist low to moderate-income earners. Check qualifications here.

• Education Credits: Includes the American Opportunity Credit and the Lifetime Learning Credit.

• Child and Dependent Care Credit: For expenses related to child or dependent care services, learn more here.

  

To learn more about my services, checkout my website and schedule a call.

Maximize Tax Deferral Options

• Maximize contributions to a 401K pre-tax, FSA, or HSA if available to reduce taxable income.

Win With Your Losers

• Sell underperforming investments in taxable account/registration to offset gains from other investments.

• This “tax-loss harvesting” helps offset ordinary income and capital gains, reducing taxes due.

• In the below example, this investor used the $3,000 loss first against their higher taxed ordinary income and the remaining loss against a realized long term gain.

Give Away Your Winners

• Fewer families itemize as the standard deduction has increased over the years.

• Deduction bunching is a strategy that can help families utilize more of the charitable deduction and also itemize when there are not sufficient deductions to do so otherwise.

• Donating shares avoids the capital gains tax due, and for many families, gives them the opportunity to fund causes they care about with assets vs. making cash contributions throughout the year.

• Using a Donor Advised Fund to receive these appreciated shares allows you to receive the deduction this year.

• You can donate those funds to charity anytime you choose.

Less-Than-Required Distributions

• For retired or older investors, once you reach required minimum distribution age, you don’t have to actually take them.

• If you donate these amounts up to $100,000 to a qualified charity via a qualified charitable distribution, that amount is not included in your taxable income.

Give The Gift Of Education

• In Missouri as an example, you can contribute up to $8,000 per individual that can be state income tax deductible.

• There are many benefits and reasons why a 529 is a powerful planning tool but an upfront state income tax deduction is yet another.

If you’re not a subscriber already, hit that button below to receive new tactics each week to help you grow income, reduce expenses, and save more now!

If you know others who would benefit from this content, please share the newsletter URL link on your social channels!!