Year-End Financial Planning: Don’t Miss Out on These Tax-Saving Opportunities
As the holiday season approaches, it’s natural to focus on family, friends, and festive celebrations. However, it’s essential to remember that the clock is ticking to make the most of tax-saving opportunities before the year ends.
Maximize Your Retirement Contributions
One crucial step to take before December 31st is to contribute to your workplace retirement account, such as a 401(k). This will not only boost your savings but also reduce your taxable income for 2024. You can contribute up to $23,000, plus an additional $7,500 if you’re 50 or older. By doing so, you’ll subtract the contributed amount from your 2024 income, resulting in a lower tax bill.
Harvest Your Investment Losses
If you’ve invested in the stock market, you may have experienced some losses this year. The good news is that you can use these losses to offset gains and income through a strategy called tax-loss harvesting. This involves selling investments at a loss to counterbalance gains and income. While the rules can be complex, consulting a professional can help you navigate the process. Remember, the goal is to use losses to offset gains, not to sell investments solely for tax purposes.
Take Advantage of Tax Credits
Are you planning to make significant purchases before the year ends? Don’t forget to explore tax credits associated with certain items, such as energy-efficient home improvements or electric vehicles. For instance, you can claim a tax credit of up to 30% of qualified expenses for home energy audits, exterior doors, and HVAC equipment. Similarly, buying a qualified electric vehicle can earn you a tax credit of up to $7,500. Just remember to prioritize your needs and don’t make purchases solely for tax benefits.
By taking these steps, you can minimize your tax liability and set yourself up for financial success in the new year. So, take control of your finances today and make the most of these year-end opportunities!
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