With 2024 quickly approaching and New Year’s resolutions on the horizon, don’t neglect your finances. To make this even easier for you, we’ve outline some basic Do’s and Don’ts for 2024 that should help you on your journey to financial security.
Do’s:
- Review Your Income and Deductions: Ensure that all your sources of income for the year are accurately reported. Review potential deductions and tax credits, such as charitable contributions, medical expenses, and education expenses.
- Maximize Retirement Contributions: Contribute as much as possible to tax-advantaged retirement accounts like 401(k)s and IRAs. These contributions can lower your taxable income.
- Harvest Tax Losses: Consider selling investments with capital losses to offset gains from other investments, reducing your overall tax liability.
- Make Required Minimum Distributions (RMDs): If you’re over 72 (or 70½ if you reached that age before January 1, 2020), ensure you take your required minimum distributions from retirement accounts to avoid penalties.
- Contribute to Health Savings Accounts (HSAs): Maximize contributions to HSAs if you have a high-deductible health plan. HSA contributions are tax-deductible and can be used for qualified medical expenses.
- Use Up Flexible Spending Account (FSA) Funds: Spend any remaining balance in your FSA before it expires at the end of the year, as these funds generally do not roll over.
- Consider Tax-Loss Harvesting: If you have capital gains, consider offsetting them by selling investments with capital losses.
- Check for Tax Credits: Determine if you qualify for any tax credits, such as the Child Tax Credit, Earned Income Tax Credit, or education-related credits.
Don’ts:
- Don’t Ignore Tax Deadlines: Ensure you meet all tax deadlines, including filing your tax return on time or requesting an extension if needed.
- Don’t Forget About Estimated Taxes: If you have self-employment income or other sources not subject to withholding, make sure you’ve paid your estimated taxes throughout the year.
- Don’t Wait Until the Last Minute: Avoid procrastination and start gathering necessary documents and information early to prevent errors and reduce stress.
- Don’t Overlook Tax Changes: Stay informed about any recent tax law changes that may affect your tax situation.
- Don’t Skip Important Deductions: Be diligent about tracking and claiming deductions you qualify for, as they can significantly reduce your taxable income.
- Don’t Ignore Retirement Account Limits: Be aware of contribution limits for retirement accounts to avoid over-contributing, which can result in penalties.
- Don’t Forget About Tax Planning: Year-end is an excellent time to review your overall financial situation and make plans for the upcoming year to optimize your tax strategy.
There are also several reputable online sites and resources you can use for tax planning and related financial tasks. Here are some of our favorites:
- IRS Website (www.irs.gov): The official website of the Internal Revenue Service provides valuable resources, including tax forms, publications, tax calculators, and tax law updates.
- TurboTax (www.turbotax.intuit.com): TurboTax offers tax preparation software and tools that can help with tax planning, tax estimation, and tax filing. They have a variety of products to suit different needs.
- H&R Block (www.hrblock.com): H&R Block provides tax preparation and planning resources, including online tax calculators, articles on tax topics, and tax tips.
- TaxAct (www.taxact.com): TaxAct offers tax preparation software and a suite of tax tools and calculators to help you estimate taxes, plan deductions, and optimize your tax situation.
- NerdWallet (www.nerdwallet.com): NerdWallet offers a wide range of financial planning tools and resources, including tax calculators, articles on tax-related topics, and financial advice.
- Investopedia (www.investopedia.com): Investopedia is a valuable resource for financial information and education. They have articles, tutorials, and calculators related to taxes and personal finance.
- Bankrate (www.bankrate.com): Bankrate offers a variety of calculators and articles to help with tax planning, retirement planning, and other financial matters.
- MyMoney.gov (www.mymoney.gov): This U.S. government website offers resources for financial planning, including tax information, budgeting tools, and retirement planning guides.
- Tax Foundation (www.taxfoundation.org): The Tax Foundation provides research and analysis on tax policies, tax data, and tax reform proposals.
It’s important to note that tax planning should be tailored to your specific circumstances, and consulting with a qualified tax professional or financial advisor can provide personalized guidance based on your individual needs and goals.