Maximizing your tax savings at the end of 2024 involves a combination of strategic planning and leveraging available tax benefits. Here’s a comprehensive guide to ensure you minimize your tax liability:

1. Contribute to Tax-Advantaged Accounts

Retirement Accounts
401(k): Maximize contributions to your 401(k) plan before December 31. The 2024 limit is $23,000 ($30,500 if you’re 50 or older). Contributions lower your taxable income.

Traditional IRA: If you qualify, contributions made by April 15, 2025 can reduce your 2024 taxable income.

Health Savings Account (HSA): Contribute up to $4,150 for individual plans or $8,300 for families in 2024 if you have a high-deductible health plan. HSA contributions are tax-deductible, grow tax-free, and withdrawals for qualified expenses are tax-free.

2. Harvest Tax Losses

Review your investment portfolio for underperforming assets. Selling them allows you to offset capital gains with losses.

You can also deduct up to $3,000 of excess losses against your ordinary income, with the remainder carried forward to future years.

3. Maximize Charitable Contributions

Donate to qualified charities before December 31. Cash donations can be deducted up to 60% of your adjusted gross income (AGI).

Consider donating appreciated assets like stocks to avoid paying capital gains tax while claiming a deduction for the full market value.

Use a Donor-Advised Fund if you want to claim a large deduction now but distribute funds over time.

4. Defer Income and Accelerate Deductions

Defer Income: Delay income, such as year-end bonuses or self-employment income, into 2025 if you expect to be in the same or a lower tax bracket.

Accelerate Deductions: Prepay deductible expenses like mortgage interest, state income taxes (subject to the SALT cap), or medical expenses (if they exceed 7.5% of your AGI).

5. Review Business Expenses

If you own a business or are self-employed:

Purchase necessary equipment or supplies by year-end to claim Section 179 or bonus depreciation.

Deduct travel, marketing, and other legitimate business expenses.

Use the home office deduction if you qualify.

6. Take Advantage of Energy Credits

Install energy-efficient home improvements, such as solar panels or heat pumps, to claim credits available under the Inflation Reduction Act.

Purchase a qualifying electric vehicle (EV) to claim up to $7,500 in federal tax credits.

7. Fund Education Savings Accounts

Contribute to a 529 Plan to take advantage of state tax deductions or credits, depending on your state’s rules.

Consider paying tuition or education-related expenses in 2024 to claim the American Opportunity Tax Credit or Lifetime Learning Credit.

8. Use Flexible Spending Account (FSA) Balances

Spend any remaining healthcare or dependent care FSA funds before they expire. Some plans allow limited rollovers or grace periods into the following year, so confirm your employer’s rules.

 9. Review Your Withholding and Estimated Taxes

Ensure your tax withholding is sufficient to avoid penalties. Adjust your December paycheck withholding or make a fourth-quarter estimated tax payment by January 15, 2025, if necessary.

10. Gift Strategically

Use the annual gift tax exclusion to gift up to $17,500 per recipient in 2024 ($35,000 for married couples) without affecting your lifetime estate and gift tax exemption.

 11. Evaluate Required Minimum Distributions (RMDs)

If you’re 73 or older, ensure you take your RMDs from retirement accounts by December 31 to avoid penalties.

Use a Qualified Charitable Distribution (QCD): Directly transfer up to $100,000 from your IRA to a qualified charity to satisfy your RMD without increasing taxable income.

12. Plan for Future Tax Law Changes

2025 marks the expiration of several provisions under the Tax Cuts and Jobs Act, including lower tax rates and the doubled standard deduction. Consider strategies that lock in current benefits, such as converting a Traditional IRA to a Roth IRA at today’s lower rates.

Final Checklist

• Confirm all contributions and deductions are recorded by December 31, 2024.
• Gather receipts and documentation for charitable contributions, business expenses, and deductible payments.
• Schedule a consultation with a tax professional to identify additional opportunities based on your financial situation.
• Strategic planning in December can lead to significant tax savings and set the stage for a strong financial start to 2025.