As 2024 wraps up, it’s time to take a close look at your finances and ensure you’re maximizing all the tax-advantaged opportunities available to you. By contributing to key accounts and making strategic moves before December 31, you can significantly lower your tax bill and set the stage for financial growth. Here’s how to make the most of your year-end planning.
1. Retirement Accounts
401(k) Contributions
For 2024, the contribution limit for 401(k) plans is $22,500 or $30,000 if you’re 50 or older. Contributions are tax-deferred, which means they reduce your taxable income now while allowing your investments to grow tax-free until retirement.
Action Tip: Check with your HR department to see if you can increase your contributions with your final paychecks of the year.
Traditional and Roth IRAs
You can contribute up to $6,500 (or $7,500 if you’re 50 or older) to an IRA. Contributions to a Traditional IRA may be tax-deductible, while Roth IRAs offer the benefit of tax-free withdrawals in retirement.
Key Deadline: Even though you have until April 15, 2025, to contribute for the 2024 tax year, contributing now gives your money more time to grow.
2. Health Savings Accounts (HSAs)
If you’re covered by a high-deductible health plan (HDHP), you can contribute to an HSA. For 2024, the contribution limits are:
$3,850 for individuals
$7,750 for families
$1,000 catch-up contribution for individuals aged 55 and older
HSAs are triple tax-advantaged: contributions are tax-deductible, earnings grow tax-free, and withdrawals for qualified medical expenses are tax-free.
Pro Tip: If you’ve fallen behind, consider making a lump-sum contribution before December 31.
3. Flexible Spending Accounts (FSAs)
Many FSAs operate on a “use it or lose it” basis, so any unused funds may be forfeited at the end of the year. Check with your employer to see if they offer a grace period or a small rollover allowance (up to $610 in 2024).
Action Tip: Schedule medical appointments, purchase eligible supplies, or explore other approved uses for your FSA funds.
4. 529 College Savings Plans
If saving for education is a priority, 529 plans are an excellent option. While contributions aren’t deductible on your federal taxes, many states offer tax deductions or credits for contributions.
Action Tip: Make a contribution before December 31 to qualify for any available state tax benefits.
5. Charitable Giving
Making charitable contributions before year-end can provide significant tax benefits, especially if you itemize deductions. Consider opening a donor-advised fund (DAF) to maximize your giving while receiving an immediate tax deduction.
Pro Tip: Donate appreciated assets, like stocks, instead of cash to avoid capital gains taxes while still receiving a deduction for the fair market value.
6. Self-Employed and Business Owners
If you’re self-employed, take advantage of retirement accounts tailored to you:
SEP IRAs: Contribute up to 25% of your compensation or $66,000 (whichever is less).
Solo 401(k)s: Contribute as both employer and employee for a combined limit of $66,000 ($73,500 if you’re over 50).
Additionally, consider prepaying expenses or deferring income to manage your 2024 tax liability strategically.
Why Act Now?
Once December 31 passes, you lose the opportunity to contribute to many accounts and maximize your deductions for 2024. Early action not only reduces your taxable income but also gives your investments more time to grow tax-free.
Let’s Create a Tailored Strategy for You
Don’t wait until the last minute to maximize your tax savings. At JS Tax Corporation, we specialize in personalized year-end tax planning to ensure you make the most of every opportunity.
📅 Schedule your year-end tax consultation now:
Time is running out—act today to secure your financial future and reduce your tax bill for 2024!
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