The end of the year is quickly approaching, but there’s still time to make smart tax moves to reduce your 2024 tax bill. However, you’ll need to act fast! Here are some strategies you can still implement before the clock strikes midnight on December 31.
1. Maximize Your Health Savings Account (HSA) Contributions
If you have a high-deductible health plan, an HSA is a triple tax win. Contributions are tax-deductible, the funds grow tax-free, and withdrawals for qualified medical expenses are tax-free. For 2024, the contribution limit is:
- $4,150 for individuals
- $8,300 for families
- +$1,000 catch-up contribution if you’re 55 or older
If you haven’t contributed the maximum, now’s the time. Unused funds roll over, can be invested, and grow tax-free, making them a great tool for future medical expenses.
2. Max Out Your Retirement Contributions
Review your contributions to your 401(k) or IRA before year-end. For 2024, the limits are:
- 401(k): $22,500 ($30,000 if you’re 50 or older)
- IRA: $7,000 ($8,000 if you’re 50 or older)
Maxing out your contributions reduces your taxable income if you contribute to a traditional IRA or 401(k). You still have until the tax-filing deadline in April to make IRA contributions that count for 2024.
3. Consider a Roth IRA Conversion
If you’re in a lower tax bracket this year, converting a traditional IRA (or similar accounts like SEP or SIMPLE IRAs) to a Roth IRA could be a savvy move. While you’ll pay taxes on the conversion now, the funds will grow tax-free, and future withdrawals will also be tax-free after five years. This is a great way to lock in tax-free income for the future.
4. Give the Gift of Wealth
Before the year ends, consider gifting money or assets to family or heirs. For 2024, you can give up to:
- $18,000 per recipient without triggering gift taxes
- $36,000 per recipient if you’re married and splitting the gift
Gifting is a thoughtful way to reduce the size of your taxable estate while helping loved ones now.
5. Don’t Miss Your Required Minimum Distribution (RMD)
If you’re 73 or older, you’re required to take distributions from retirement accounts. Failing to do so can lead to hefty penalties. Not sure you need the income? Consider a Qualified Charitable Distribution (QCD) of up to $100,000. This lets you satisfy your RMD, donate to a cause you care about, and avoid paying taxes on the distribution.
6. Contribute to a 529 Education Plan
Want to save for a loved one’s education? You can contribute up to five years’ worth of gift-tax exemptions in one year:
- $85,000 per beneficiary ($170,000 if married)
This strategy maximizes the growth potential of the account while taking advantage of tax benefits.
Time Is Running Out
It’s not too late to reduce your 2024 tax bill—but time is of the essence. Acting now ensures you make the most of these opportunities before the year ends.
For personalized guidance, reach out to your tax advisor or accountant today! Contact us here or call us today at (949) 857-0404 to schedule a consultation with our tax experts at Masler & Associates, Inc.
