Tax Planning During the Dog Days of Summer
In these long “dog days” of summer it is difficult to contemplate year-end – much less year-end tax planning – but given we are five months from December 31, let’s do it anyway. Starting your tax planning early allows you to take advantage of various tax-saving opportunities that can positively impact your financial situation. Here are a few ideas to consider.
Charitable Contributions – Make charitable donations now and be sure to save your receipts for charitable gifts of $250+. If you make CASH donations to charity in 2024, you could deduct up to 60% of your adjusted gross income (AGI). If you are 70 ½ or older, charitable gifts through an IRA Qualified Charitable Distribution (QCD) can be a great way to save on taxes. If you have questions about the deductibility of various assets to charity, IRS Publication 526 is your go-to for answers. Of course, you should always check with your tax advisor!
Medical Expenses – Medical expenses that exceed 7.5% of your AGI may be deductible. Admittedly, 7.5% of AGI is a high threshold but you might be surprised by how quickly you reach that amount if you consider all unreimbursed or out-of-pocket medical bills, health insurance premiums, prescription costs, and other qualified medical expenses. Check with your tax advisor to see if this deduction might work for you. If it does, you might consider buying those new glasses before year-end.
State and Local Taxes – Providing you itemize (vs. taking the standard deduction), you can deduct state and local income taxes (or state and local sales taxes) up to $10,000. Set a reminder to pay your property taxes in early December to lock in that deduction.
- FYI, in 2024, the standard deduction for individuals and married couples filing separately is $14,600. Married couples filing jointly will see a standard deduction of $29,200.
Business Expenses – If you’re self-employed, or have unreimbursed business expenses as an employee, you may be able to deduct certain expenses related to your work, such as home office expenses, mileage, and professional development costs. Start gathering that information now. You might consider buying that new printer, or other office supplies, before December 31.
Traditional IRA contributions – Contributions to traditional IRAs are often tax-deductible, subject to income limits and other eligibility criteria. Check with your advisor to ensure you are maximizing the amount you can possibly contribute to your IRA in 2024. This will bode well for your retirement planning and help with your 2024 tax bill.
These are only a few strategies that may assist you with tax savings on your 2024 tax return. Your personal advisors can share many more. We suggest you cozy up now with an ice-cold lemonade and get to work because you know December will be here in the blink of an eye.
This information is provided with the understanding that neither Duke University nor the author are providing legal, accounting, or other professional advice or counsel. Please consult your personal counsel about the financial, tax, and legal implications of any gift.
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