With the dawn of 2024, let’s harness the power of the new tax year. It’s not just about numbers on a form; it’s about empowering yourself, securing your future, and increasing your savings.
1. The Power of Your Adjusted Gross Income
Your Adjusted Gross Income (AGI) is a crucial number that affects various aspects of your financial life. It determines your eligibility for contributions to retirement plans, medical-expense deductions, and even the 3.8% surtax on investment income. Stay ahead by monitoring your AGI, especially with rising interest rates.
2. Don’t let a low-income year go to waste.
Whether you’re a new retiree, a student entering or leaving the workforce, or facing unexpected layoffs, a low-income year presents unique opportunities. Consider converting a traditional IRA to a Roth IRA, contributing after-tax dollars to a Roth IRA, or exploring tax-free benefits when selling appreciated assets with a low-income tax bracket.
While investing in money-market funds can be advantageous, knowing state-tax implications is crucial, especially in funds holding government debt. Learn the nuances to maximize your returns without falling into state-tax traps, particularly in high-tax states like California, New York, and Connecticut.
Taxes may not be the first consideration in times of loss, but they are important. Take note that the year of your spouse’s death is the last for joint filing, potentially resulting in lower taxes. Act promptly to make informed decisions about income acceleration and asset sales, considering the step-up in cost basis.
Keep records of capital improvements to reduce capital gains taxes when selling your home. The $250,000 or $500,000 exemption for single or married filers is a valuable tax break that can be preserved with proper documentation.
6. Don’t Miss Out on Charitable Deductions
For charitable donors aged 70 1/2 or older, QCDs offer an excellent tax break. Make sure not to overlook claiming QCDs on your tax return, as they can significantly reduce your taxable income while supporting the causes you care about.
7. Stay Ahead of Rising Interest Rates
With the Federal Reserve’s rate increases, underpayments have climbed to 8% annually. Stay ahead of this by ensuring you meet your tax obligations on time, avoiding interest-based penalties.
Make 2024 the year you take control of your taxes. Don’t Just File!
Book your tax assessment with us today, and let’s start implementing these strategies.
Happy New Year!