Year-End Tax Checklist for 2024 for Effective Tax Planning

As we approach the end of the year, it's crucial to complete your tax planning to maximize your benefits and ensure compliance with the latest regulations. Review our updated tax checklist below to stay on track with your tax planning. Print it out, and take 15 minutes to highlight the items you need to discuss with your advisors. We want to ensure you take advantage of every opportunity and safeguard your financial health going into 2025.

What You Need to Prepare for Effective Tax Planning

1. Maximize Retirement Contributions

• 401(k): Ensure you’ve maximized your contributions. For 2024, the limit is $23,000 for those under 50 and $30,500 for those 50 and older.
• IRA: The contribution limit for IRAs is $7,000 for those under 50 and $8,000 for those 50 and older.
• Catch-up contributions: If you’re over 50, use catch-up contributions for additional savings. The catch-up contribution limit for employees 50 and over who participate in SIMPLE plans remains $3,500 for 2024.

2. Review Capital Gains and Losses

• Tax-Loss Harvesting: Offset capital gains by selling underperforming investments.
• Gains Timing: Consider delaying the sale of investments until the next tax year to defer taxes.

3. Evaluate Charitable Contributions

• Donations: Ensure all charitable contributions are documented and consider donating appreciated stocks.
• Donor-Advised Funds: If you plan to make substantial charitable donations, consider using a donor-advised fund for potential tax benefits.

4. Plan for Required Minimum Distributions (RMDs)

• IRA and 401(k) RMDs: If you are over 73, ensure you take the correct RMD or plan ahead if you’re nearing this age.

5. Check Your Health Savings Account (HSA) Contributions

• Contribution limits: For 2024, the limits are $4,150 for individuals and $8,300 for families. Those over 55 can contribute an additional $1,000.
• Remember that to contribute to an HSA, you must be enrolled in an HSA-eligible health plan and not be enrolled in Medicare.

6. Review Your Withholding and Estimated Tax Payments

• Adjust withholding: Ensure your withholding reflects your current tax situation to avoid surprises at tax time.
• Estimated payments: Make any necessary adjustments to your estimated tax payments to avoid penalties.

7. Utilize Education Savings Accounts

• 529 Plans: Consider contributing to a 529 plan for education savings, which may offer state tax deductions.

8. Consider Tax-Deferred Annuities

• Annuities: Evaluate whether contributing to a tax-deferred annuity could benefit your long-term financial strategy.

9. Evaluate Your Estate Plan

• Gifting: The annual gift tax exclusion for 2024 is $18,000 per recipient. Married couples can use gift-splitting to give up to $36,000 without the gift being considered taxable. Plan your gifts to reduce estate taxes. 
• Trusts: Review any trusts to ensure they are up-to-date and reflect your current wishes.

10. Review Business Expenses and Deductions

• Expenses: Ensure all business expenses are documented, and consider making large purchases before year-end to maximize deductions.
• Qualified Business Income (QBI) deduction: Ensure you’re taking full advantage of the QBI deduction if eligible.

11. Plan for Energy Credits

• Home improvements: Consider making energy-efficient home improvements to take advantage of energy tax credits.

12. Review Your Tax Bracket and Income

• Income timing: Consider deferring income or accelerating deductions if you’re close to the next tax bracket.

13. Evaluate Insurance Needs

• Health insurance: Review your health insurance to ensure it meets your needs and consider Flexible Spending Account (FSA) contributions.
• Life insurance: Ensure your life insurance policies are up-to-date and adequate for your needs.

Final Thoughts

Reviewing and acting on this checklist can potentially provide tax savings and ensure you're well-prepared for the upcoming tax season. Schedule a meeting with your tax advisor to discuss these tax planning strategies and tailor them to your personal situation.

We are here to help you navigate these complexities and optimize your financial health. Please contact us for further assistance or with any questions you may have.

We look forward to working with you and your tax professional to examine strategies that could benefit you.