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As we approach the end of 2024, it’s time to take a closer look at your finances to ensure you’re making the most of available tax planning opportunities. Whether you’re maximizing deductions, leveraging your employer benefits, or preparing for next year’s contributions, this checklist will help you cover all the bases.
1. Maximize Tax-Deductible Contributions
Contributing to tax-advantaged accounts like 401(k)s, 403(b)s, or 457(b)s is one of the most effective ways to lower your taxable income while saving for retirement. For 2024, the contribution limit is $23,000, with an additional $7,500 catch-up contribution for those aged 50 or older.
2. Explore Roth Conversion Opportunities
If you experienced lower income this year, consider converting pre-tax retirement savings into a Roth IRA. This allows for tax-free growth and withdrawals in retirement. Additionally, high-income earners might explore a mega backdoor Roth IRA if they’ve maxed out contributions to their 401(k).
Learn more: Roth IRAs: Tax Rules You Need to Know
3. Don’t Miss Required Minimum Distributions (RMDs)
If you’re over age 73, you must withdraw a specific portion from tax-deferred accounts annually. Missing the RMD deadline could result in a hefty penalty of 50% on the amount not withdrawn.
Learn more: IRS Required Minimum Distributions
4. Take Advantage of Tax-Loss Harvesting
Offset your capital gains or reduce taxable income by selling underperforming investments. The IRS allows you to deduct up to $3,000 of capital losses annually, with excess losses carried forward to future years.
Learn more: Tax Loss Harvesting Rules
5. Optimize Charitable Contributions
Charitable giving can reduce your tax burden while supporting causes you care about. Strategies like bunching contributions or using a donor-advised fund can maximize deductions. Qualified Charitable Distributions (QCDs) from IRAs are another tax-efficient option for retirees.
Learn more: IRS Guidelines on Charitable Contributions
6. Max Out Health Savings Account (HSA) Contributions
An HSA offers triple tax benefits: contributions are tax-deductible, growth is tax-free, and withdrawals for qualified expenses are tax-free. For 2024, the contribution limits are $3,850 for individuals and $7,750 for families, with an additional $1,000 catch-up contribution for those aged 55 or older.
Learn more: IRS HSA Contribution Limits
7. IRA Contributions for Non-Working Spouses
Even if your spouse doesn’t have earned income, they can contribute to an IRA based on your income. For 2024, the limit is $7,000 (or $8,000 if 50 or older), with income phaseouts applying.
Learn more: Spousal IRA Contributions
8. Leverage Self-Employed Retirement Options
If you’re self-employed, consider opening a Solo 401(k) or SEP IRA. These accounts allow contributions up to $69,000 in 2024, depending on your income.
Learn more: IRS SEP Plans
9. Strategize Capital Gains
Understand the implications of holding and selling Restricted Stock Units (RSUs) or other investments. Many employees at tech companies face unexpected tax liabilities due to under-withholding on RSU income.
Learn more: Understanding RSU Taxation
10. Plan Next Year’s Contributions
Set up automatic contributions for retirement and HSA accounts for 2025 to stay consistent. Review potential IRS updates to contribution limits or tax brackets.
Learn more: IRS Retirement Savings Updates
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Disclosures
The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.
The views expressed in this commentary are subject to change based on market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.
All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.
The information contained above is for illustrative purposes only.
No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment.
All investments include a risk of loss that clients should be prepared to bear. The principal risks of Carson Capital's strategies are disclosed in the publicly available Form ADV Part 2A.
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