1. Postpone income until 2025 and accelerate expenses in 2024 to lower your 2024 tax liability. This strategy will enable you to claim larger deductions, credit, and other tax breaks for 2024 such as child tax credits, higher education credits, and student loan deductions.

2. If you’ve had significant capital gains in 2024, consider selling stocks that have declined in value to offset these gains. The capital gains rates are 0%, 15%, or 20% depending upon your income. 

3. If you expect your adjusted gross income to be lower in 2024, this may be the year to convert the assets in your traditional IRA account to your Roth IRA account. This is known as a Roth conversion. The converted amount will be taxed as ordinary income.

4. Consider the purchase of an electric vehicle in 2024. Many new electric vehicles qualify for a credit of up to $7,500 on a new electric vehicle and a credit of up to $4,000 on a used electric vehicle.

5. You may be able to save taxes this year by using a “bunching strategy” for itemized deductions, such as maximizing medical expenses and charitable gifts paid out of pocket, as well as prepaying your January 2025 property tax bill and mortgage payment.

6. If you turn 73 in 2024, you are required to start taking a required minimum distribution (RMD) from your traditional IRA or 401(k) plan. An RMD must be taken by April 1 of the year following the year that you turn 73.  For those who are 70-1/2 or older, you can make a qualified charitable deduction (QCD) of your RMD to your favorite charity of up to $105,000. The amount of the distribution will be tax-free.

7. For 2024, you can use your annual gift tax exclusion without any tax consequences and give up to $18,000 per person or $36,000 per person if married.

8. If you can make your health savings account (HSA) contributions by December 1, 2024, you can take a tax deduction of a full year’s worth of contributions for 2024. For 2024, the contribution limit for singles is $4,150 and $8,300 for families.

9. Arrange for your employer to defer your bonus until 2025 to reduce your salary or wage income in 2024.

10. Contribute the maximum amount to your employer’s retirement plan to reduce your taxable wages. The 2024 limits are: (1) 401(K):  $23,000 plus a $7,500 catch-up contribution if 50 or older, (2) SIMPLE IRA: $16,000 plus a $3,500 catch-up contribution if 50 or older, and (3) Traditional and Roth IRA: $7,000 plus a $1,000 catch-up contribution if 50 or older.

To learn more about 2024 tax planning ideas, call our office today at (727) 391-7373.