As 2024 comes to a close, it’s time to take a look at opportunities to reduce your tax burden. Whether you’re looking to save a little extra or have surplus income to manage, there are simple year-end strategies that can help.

Tax-Saving opportunities for Individual Tax Filers:

1. Maximize HSA Contributions

• Health Savings Accounts (HSAs) are one of the best ways to save on taxes.

• Contributions to an HSA reduce your taxable income.

• Depending on your tax bracket, you could save anywhere from $1,600 to $3,500 next year when you will file your taxes in 2025.

• The true power of HSAs is in tax-free growth.

• An $8,300 contribution, invested at a 20% annual return, could grow to about $1,970,223 over 30 years. ​​

2. Leverage Charitable Donations

• Donating to qualified charities supports causes you care about and offers tax savings.

• For example, a $10,000 donation could yield a $2,000 to $4,000 tax benefit when you file your taxes in 2025, depending on your tax rate.

• Even smaller donations can add up, so don’t overlook this opportunity.

• Strategic donations in the final weeks of the year can help maximize your deductions.

• Just go to goodwill and donate something to get a receipt from goodwill. or donate to your favorite charity and save money on taxes.

3. Take Full Advantage of Retirement Accounts

• Contributions to retirement accounts, such as 401(k)s and Roth IRAs, are powerful tools for reducing your tax liability.

• Contributions to a traditional 401(k) are tax-deferred, while Roth IRAs grow tax-free.

• If you invest $40,000 each year for 30 years and your investment grows at an annual rate of 20%, you will accumulate approximately $56,730,315 by the end of the 30-year period.

Tax-Saving Strategies for Business Owners
1. Pay Yourself Rent

If you own the property from which your S Corp operates, consider paying yourself rent. Up to $14,000 per year can be paid from your business to your personal account, reducing the taxable income of your business and increasing your personal income in a tax-efficient way.

Connect with us to calculate if your business property qualify for rent payments to reduce taxable income?

2. Allocate Payments for Children

Business owners with children may be able to allocate payments to them as compensation for work performed in the business. You can pay up to $14,600 per child, tax-free for the child and tax-deductible for the business. This strategy can help reduce your business’s taxable income while benefiting your children.

3. Solo 401(k) Contributions

If you’re a business owner without employees, a Solo 401(k) offers a fantastic way to save for retirement. For 2024, you can contribute up to 25% of your compensation, with a maximum of $69,000. This can significantly reduce your taxable income while building a larger retirement nest egg.

4. Maximize Retirement Contributions

Similar to individuals, business owners can benefit from contributing the maximum allowable amount to retirement accounts. Whether it’s a Solo 401(k), SEP IRA, or other accounts, contributing $30,000 today could grow to $116,091 in 20 years, assuming a 7% return.

The earlier you take action, the more your savings can grow over time. 

key deadlines

Here are the for contributing to retirement funds and Health Savings Accounts (HSAs) for the 2024 tax year:

Retirement Accounts

Traditional IRA and Roth IRA Contributions

• Deadline: April 15, 2025 (Tax Day for the 2024 tax year).

• Contributions for the 2024 tax year can be made at any time during the calendar year 2024 and up until the tax filing deadline in 2025.

401(k), 403(b), and Other Employer-Sponsored Plans

Employee Contributions

• Deadline: December 31, 2024.

• Employer contributions (if applicable): These can often be made until the employer’s tax filing deadline, including extensions, for 2024.

SEP IRA Contributions

• Deadline: April 15, 2025, or the employer’s tax filing deadline, including extensions, for 2024.

• This applies to business owners or self-employed individuals making contributions to their SEP IRAs.

SIMPLE IRA Contributions

• Employee Contributions Deadline: December 31, 2024.

• Employer Contributions: Deadline is the employer's tax filing deadline, including extensions.

Solo 401(k) Contributions

• Employee Contributions Deadline: December 31, 2024.

• Employer Contributions: April 15, 2025, or the tax filing deadline, including extensions.

Wishing you a joyful and prosperous New Year 2025! As we step into this new chapter, we hope that it brings you an abundance.

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