2024 Year-End Tax Planning for Individuals
We are quickly approaching the close of the 2024 tax year. While many people are concerned about how the election will affect their finances and taxes, please keep in mind that the laws concerning tax year 2024 will not be affected. Once the new administration takes their place in January, we will be certain to keep you updated on changes to tax policy.
As a reminder, below are the tax moves you may want to consider before the end of 2024 to help with your year-end tax planning and reduce your tax bill in April.
401(k) plan
Make the maximum permissible contribution under a 401(k) plan, if offered by the employer. You can contribute up to $23,000 or $30,500 if over age 50, for 2024.
Annual Gifts
You can make gifts up to $18,000 for 2024 to anyone without any gift tax consequences. Married couples can double the amount to $36,000.
Qualified Charitable Distributions (QCDs)
This is a tax-free withdrawal from an IRA made directly to a qualifying charity. It also satisfies the IRA holder’s required minimum distributions. If you are over age 70 ½ and own an IRA, you may be able to make a charitable gift of up to $105,000 for 2024.
Required Minimum Distribution (RMD)
Be certain to speak with your financial advisor to determine if you need to take a RMD in 2024, and if yes, how much. You want to be certain to take the correct amount of the RMD to avoid tax penalties.
Tax Loss Harvesting and Wash Sale
Manage gains and losses in investment accounts. Avoid wash sale, meaning wait at least 31 days to repurchase securities and buy similar but not identical securities. When a wash sale occurs, the loss from transaction is disallowed and is unable to offset other gains. To the extent you have capital losses this year or capital loss carryovers from earlier years, selling appreciated securities by year-end may not increase your taxes.
Tax Withholding
If you had a large refund or tax bill last year, check your W2 tax withholdings to avoid any surprises in April. You can use the IRS’s Tax Withholding Calculator Estimator to get a general sense for whether you will be under or overpaid with your tax withholding.
We will continue to monitor all future developments and keep you informed with the latest tax law changes.
As always, should you have questions on this or other matters affecting you or your business, please call or email us to speak with a CPA today.
DISCLAIMER: The WM Update, WM Wednesday Wisdom, WM Daily Update, and other related communications are intended to provide general information, as of the date of this communication, and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.
