Ideally, you have strived to minimize your taxes all year. Good news! Here are some year-end strategies that may help cut your tax bill even more. Before implementing these or any year-end strategies, talk with your tax advisor.
DEFER OR ACCELERATE INCOME
Project whether you’ll have higher taxable income in 2024 or 2025. If it’s 2025, consider receiving any potential bonus, investment and other supplemental income this year.
Do the opposite if, for example, you’ll have fewer dependents to deduct next year, have a spouse taking leave, suffer business losses, etc., resulting in having less taxable income in 2025.
BUNCH DEDUCTIONS
For instance, if medical expenses for 2024 year exceed the deductible minimum threshold of 7.5% of adjusted gross income (AGI), squeeze in medical expenses planned for 2025 to maximize tax 2024 savings.
Before bunching any expenses into 2024, consider your overall tax bracket for this tax year and 2025. If you anticipate income increasing enough in 2025 to put you in a higher bracket, it may make sense to postpone a deduction.
TOP OFF YOUR CONTRIBUTIONS
You have until the April 15, 2025, tax filing deadline to make Health Savings Account (HSA) contributions for this year. If you have not already maximized your contribution, do so. Contributions and earnings are generally excluded from taxable income.