I can’t believe 2024 is almost over. Where has the time gone? In this article, I want to give you 7 tips that will for sure make a difference on your bottom line. You still have time to do these before the end of the year. These tips can make a difference as to whether you get a refund or you pay Uncle Sam.

Now, let’s dive in and see if we can help save you some money.

Here are 7 key actions you can take to lower your taxable income for this year before time runs out.

#1. Contribute to a Health Savings Account (HSA)

HSA accounts are great because they allow for tax-free growth, contributions are tax-deductible and withdrawals for qualified medical expenses are tax-free.

For 2024, the contribution limits are $3,850 for individuals and $7,750 for families, with an additional $1,000 catch-up contribution for those aged 55 and older.

And for 2025, the HSA contribution limits are $4,330 for individuals and $8,550 for families, with an additional $1,000 catch-up contribution for those aged 55 and older.

#2. Real Estate: Utilize the Augusta Rule

Under Section 280A(g) of the Internal Revenue Code, known as the Augusta Rule, homeowners can rent out their personal residence for up to 14 days per year without reporting the rental income.

This provision can be particularly beneficial for business owners who rent their home to their business for meetings or events, allowing the business to deduct the rental expense while the homeowner receives tax-free income.

#3. Accelerate Business Expenses

Purchasing necessary business equipment or supplies before year-end can provide immediate tax deductions. Even if you finance these purchases, the IRS allows you to deduct the full cost in the current tax year under Section 179, provided the assets are placed in service by December 31.

This strategy reduces your taxable income and can improve cash flow. If you are ready for that electric car, you can write off the entire vehicle, not to mention you get the electric car tax credit.

#4. Maximize Retirement Contributions

Contributing to retirement accounts such as a 401(k) or IRA can lower your taxable income. For 2024, the contribution limit for 401(k) plans is $22,500, with a $7,500 catch-up contribution for those aged 50 and over.

Traditional IRA contributions are tax-deductible, with limits of $6,500 and a $1,000 catch-up for those 50 and older. Remember that you may also contribute to lower your business income substantially to a defined benefit plan.

#5. Review and Optimize Tax Withholding

Ensure that your tax withholding aligns with your expected tax liability to avoid underpayment penalties. The IRS Tax Withholding Estimator can help determine if adjustments are needed.

#6. Harvest Tax Losses

If you have investments that have declined in value, consider selling them to realize a capital loss. These losses can offset capital gains and up to $3,000 of ordinary income, thus reducing your taxable income.

#7. Make Charitable Contributions

Donating to qualified charitable organizations can provide tax deductions. Ensure that contributions are made by December 31 and that you obtain proper documentation for your records.

Implementing these strategies before year-end can significantly impact your tax liability.

As always, consulting with a tax professional is advisable to tailor these actions to your specific financial situation.

Free Complimentary Consultation

If you don’t already know me, my name is Sonia Narvaez. I’m a licensed CPA and wealth-building strategist with over 25 years of experience.

If you have any questions about how to take advantage of the latest tax savings strategies, don’t hesitate to contact us.

To get your FREE complimentary consultation with a member of my team, simply click this scheduling link, and pick the time that works best for you. We would love to help and meet with you.