Top Ten Tax Planning Tips for 2024
The new year is here and while the books are closed on 2023, now’s a perfect time to make the most of your opportunities and start planning your tax strategy for 2024.
Taking smart actions early on can help reduce your tax liabilities and maximize available deductions – and with that in mind, here are the top ten tax tasks to prioritize in January.
1. Organize your financial documents
Collect and organize your financial documents – W-2s, 1099s, receipts, and records of deductible expenses to keep track of your finances and ensure you don’t miss out on any potential deductions.
2. Make retirement account contributions
If you have retirement accounts like IRAs or 401(k)s, it’s a good idea to contribute to them in January. It could lead to tax savings, as they might be deductible or offer tax-deferred growth.
3. Max out your HSA
If you have a high-deductible health plan (HDHP), you can maximize tax advantages by contributing to a Health Savings Account (HSA). Your HSA contributions for the year are tax-deductible and can be used tax-free for qualifying medical expenses.
4. Make sure you’re not overpaying – or underpaying
Review your tax withholding allowances and assess if they align with your tax situation. If you’ve made a change in your personal circumstances, like getting married, having a child, or a significant change in income, you might need to adjust your withholding to avoid underpayment or overpayment of taxes throughout the year.
5. Pull charitable contributions forward
Planning on making charitable deductions this year? Consider making any planned charitable contributions early on – donations to qualified charitable organizations can be tax-deductible if you itemize deductions.
6. Brush up on tax credits
Familiarize yourself with available tax credits and deductions for which you might be eligible. There are some new ones this year, including tax credits for both new and used electric vehicles (EVs) and some energy-efficient home improvements. Planning early allows you to take advantage of these benefits throughout the year.
7. Consider estimated tax payments
If you expect to owe significant taxes that aren’t subject to withholding, like self-employment income or investment earnings, consider making estimated tax payments. Taking this step can prevent penalties and interest charges, which can be substantial.
8. Look over your investments
Evaluate your investment portfolio and consider realizing capital gains or losses strategically. This step may seem counterintuitive, but can help offset gains with losses, potentially reducing your overall tax liability.
9. Stay up-to-date on tax law changes
Keeping up with new tax laws or significant tax law changes that might impact your tax situation enables you to adapt your tax strategy accordingly early in the year – and that helps optimize the benefits.
10. Don’t go it alone
Seek guidance from a qualified tax professional or accountant to help create a personalized tax strategy tailored to your financial situation. The top-notch team of Barnes Dennig tax pros can help you optimize your tax strategy to reduce your tax burden and maximize your credits and deductions.
That’s not all.
Taking care of these key aspects of tax planning in January can help you set a strong foundation for effective tax management throughout the year – leading to potential tax savings and a smoother tax filing experience come tax season.
If you’d like to learn more about energy-efficient tax credits, this short video on year-end tax planning tips has some great detail – or you can check out how the SECURE 2.0 Act may benefit you. You may also be interested in our Signature Tax Event on preparing for economic uncertainty, now available on-demand. Estate planning strategies can help make the most of your assets and your legacy – get the details in this recent blog post. If you have questions or would like to talk through your tax situation with one of our top tax professionals, contact us. As always, we’re here to help.