TEXARKANA MAGAZINE
YEAR-END TAX TIPS SPONSORED BY SARAH BERRY, CPA, PLLC As the year winds down, it is the perfect time to implement strategic financial moves that could significantly reduce your tax bill. Whether you are an individual taxpayer or a small business owner, taking steps now can lead to major savings in April. Here are ten recommended, actionable tax tips to help you maximize deductions, minimize liabilities, and ease the burden of tax season.
education expenses. For example, a $5,000 contribution might offer a state income tax deduction where applicable. To learn more, you can explore a state-by-state guide to 529 tax benefits on savingforcollege.com or contact a local financial advisor for personalized guidance. 5. Claiming energy tax credits can be a great way to save if you have made energy-efficient home improvements this year. Upgrades like installing solar panels, energy-efficient windows, or new insulation may qualify for federal tax credits. For instance, installing solar panels in 2024 could result in a 30% federal tax credit on the installation cost, potentially saving thousands. To explore local incentives or rebates, check with your state or local energy provider, and for details on federal credits, visit energy.gov . 6. Self-employed individuals and small business owners can reduce their taxable income by prepaying necessary business expenses before year-end, such as office supplies, advertising costs, or software subscriptions. For example, prepaying $3,000 in expenses could result in $720 in tax savings if you are in the 24% tax bracket. To find additional guidance or local resources for small businesses, consider consulting a tax advisor or small business development center, and refer to IRS Publication 535 for details on deductible expenses. 7. Maximizing contributions to a Health Savings Account (HSA) can provide triple tax benefits—contributions are tax-deductible, account growth is tax-free, and withdrawals for qualified expenses are also tax-free. For example, if you contribute $3,850 as an individual, you could reduce your taxable income by that amount, potentially saving you hundreds in taxes. For local guidance on HSAs, reach
1. Maximizing contributions to retirement accounts like a 401(k), IRA, or, for the self-employed, a SEP (Simplified Employee Pension) IRA or Solo 401(k), is an effective way to lower taxable income and build financial security for the future. For instance, if you are in the 24% tax bracket, contributing $10,000 to a retirement plan could yield $2,400 in tax savings. For specific 2024 contribution limits and details on tax benefits, visit IRS.gov . 2. Consider tax-loss harvesting as a strategy to offset capital gains with capital losses, which can help reduce your taxable income if your portfolio performed well this year. This involves selling investments at a loss to counterbalance gains. For example, if you sold stock A for a $5,000 gain, you could sell stock B for a $5,000 loss to offset the gain, potentially saving you hundreds in taxes. For detailed guidance on implementing this strategy, consider consulting local financial advisors or exploring resources offered by investment firms. 3. Optimizing charitable contributions by making donations to qualified charities before year-end can help you benefit from a tax deduction while supporting meaningful causes. Both cash and non-cash contributions are eligible, and these deductions can add up. For example, a $500 cash donation to a qualified charity could provide $120 in tax savings if you are in the 24% tax bracket. To find qualified charities, consider reaching out to local nonprofit
organizations or community foundations, and refer to IRS guidelines for specific rules on charitable deductions. ( Scan the QR code to view the “2024 Giving Guide” for more information on eligible local nonprofits. )
out to a financial advisor or local bank offering HSA accounts, and consult IRS Publication 969 for current contribution limits and details on qualified expenses.
4. If you are saving for education, consider making contributions to a 529 Plan before year-end, as it could provide state tax benefits in eligible states. These accounts grow tax-free as long as the funds are used for qualified
12
BUSINESS & POLITICS
Made with FlippingBook - Online catalogs