Make your 2024 Taxes Less Taxing by giving yourself a Tax Checkup!
As April 15th approaches, taxpayers across the country are gearing up to fulfill their annual obligation – filing taxes. Whether you’ve already submitted your returns or are yet to tackle the paperwork, now is the perfect time for a tax check-up. Here are 5 areas to review to determine if you may need to make some adjustments for 2024.
Review Tax Withholding: Check your paystubs to assess if adjustments to your W-4 are needed to avoid overpaying or underpaying taxes in 2024. If you had a big tax bill, consider increasing your withholdings and if you received a large refund that may mean you are withholding too much from each paycheck and essentially giving the government a free loan until next April. The IRS website has this helpful Tax Withholding Estimator you can use as a reference if you are unsure how much to withhold.
Quarterly Payments: If you had a large tax bill last, consider making quarterly payments.to avoid penalties for underpayment
Maximize Deductions and Credits: There are numerous tax deductions and credits that you may be eligible for, from deductions for charitable gifts, to an electric vehicle tax credit. There are some income limits/phaseouts to be aware of but it is always helpful to review what may be available to you this year that you may not have been eligible for last year.
Explore Tax-Advantaged Accounts: One way to lower your tax burden is to take advantage of your employer’s retirement plan if they have one by contributing pre-tax dollars into your 401(k) or 403(b). If you weren’t able to max out those accounts last year, can you increase your contributions this year? You may also be eligible to make deductible Traditional IRA contributions depending on whether you have access to an employer retirement plan and your income level.
Healthcare Expenses: If your employer offers HSAs or FSAs, these can be a great way to help manage expenses related to healthcare but also be a good way to reduce your taxable income. FSA’s are usually a “use it or lose it” type of account where you have to use the full amount in that calendar year (with some grace period exception) whereas an HSA can be invested and continue to grow until you reach retirement age.
If you still haven’t filed your taxes for 2023, now is the time to get organized, and here are a few other resources to help you plan for taxes for 2024.
Other Resources
What can you learn from your latest tax return?
What is Tax Loss Harvesting and when should I do it?
