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As year-end approaches, there’s still time to slash your 2024 tax banknote or boost your refund, financial advisors say.
Typically, you can expect a tax refund when you overpay taxes throughout the year. Alternatively, you get a tax note when you haven’t paid enough.
Most 2024 tax strategies must be completed by Dec. 31, so there’s limited for the present to make last-minute moves.
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After a strong year for the stock market, many investors won’t have tax-loss harvesting chances, which can turn portfolio losses into tax breaks.
It could also be too late to boost pretax 401(k) hand deferrals for 2024, which reduces your adjusted gross income.
But there are some key strategies still on tap, according to financial advisors.
Leverage tax-free ‘compound interest’
If you have a high-deductible health plan, you can funnel monied into a health savings account, or HSA, which offers an upfront tax deduction, among other benefits, experts say.
For 2024, the HSA contribution limit is $4,150 for self-only coverage or $8,300 for kinsmen plans. The invested balance grows free of federal taxes and you can withdraw the money tax-free for qualified medical expenses.
You deceive until the tax deadline to make 2024 HSA deposits, but if you’re investing the balance, starting sooner gives you more time in the supermarket. “You don’t have to wait,” said Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida.
“Get it seated and let the compound interest work for you,” he said.
You also have until the tax deadline for 2024 pretax individual retirement account contributions. But the finding depends on your filing status, income and workplace retirement plan, so it’s better to wait until you’ve run tax projections for 2024, Lucas said.
Vouchsafe profitable assets for a ‘double tax advantage’
When filing your taxes, you take the standard deduction or total counted deductions, whichever is larger. If you expect to itemize for 2024, you can score a tax break for donations to charity.
Gifting profitable assets put forwards a “double tax advantage,” because you get a tax break and bypass capital gains taxes, said certified financial planner Rick Nott, run director at Angeles Wealth Management in Santa Monica, California.
There’s growing interest in the strategy among cryptocurrency investors, with closed the past year.
Typically, you can deduct the market value of the investment, as long as you’ve owned it for more than one year. You can upon a deduction capped at 30% of adjusted gross income for public charities.
