2024 is almost over, but it’s not too late to tax plan and decrease your taxes for the 2024 tax season.

Hello, my name is Sonia Narvaez, and if you’re a freelancer or small business owner who files a Schedule C, I wrote this article just for you.

Today, I’ll guide you through a clear, step-by-step plan to ensure you get the maximum tax savings before it’s too late. Now, let’s dive in!

Maximize Business Expense Deductions

So the first thing you need to do to reduce your 2024 taxes is to assess where you stand financially right now.

To do this, you need to thoroughly review your income and expenses for 2024 to determine what your taxable income will be.

To help you do this, I have put together a free tool for you. It’s a free downloadable PDF and it does not require an opt-in. It’s simple yet powerful. To download it, click here -> Self Employed Expense / Income Sheet. With this sheet, you will identify the deductions you need to take, as well aa get a quick birdseye view of your 2024 tax situation.

Once you’ve assessed your financials, consider making necessary business purchases before December 31st to offset your tax liability.

If you feel like you need to buy something for the business, buy it before the year’s end. Even if you put it on a credit card, it is still deductible in the year it is purchased.

An often missed deduction is for those that work at home. Do you work out of your home? If you use any portion of your home exclusively for business, you’re entitled to some very nice tax deductions.

If you’re using any part of your home for business purposes, the IRS lets you deduct a portion of your rent, mortgage, utilities, and internet costs. This applies to a cozy corner of your apartment or a whole room dedicated to your side hustle or business.

Contribute to a Health Savings Account (HSA)

As a freelancer or small business owner, contributing to a Health Savings Account or HSA is a smart strategic move to reduce your taxable income and save for future medical expenses.

Here’s how it works:

• To be eligible to contribute to an HSA, you must be enrolled in a High-Deductible Health Plan (HDHP). For 2024, an HDHP is defined as a plan with a minimum deductible of $1,600 for self-only coverage and $3,200 for family coverage.
• The contribution limits in 2024 are up to $4,150 for individuals and $8,300 for families. Also, if you’re 55 or older, you can make an additional catch-up contribution of $1,000.
• The great thing is that all contributions to an HSA are considered tax-deductible, thus reducing your taxable income. Additionally, the funds can grow tax-free, and withdrawals for qualified medical expenses are also tax-free.
• HSA funds can be used for a wide range of medical expenses, including doctor visits, prescription medications, dental and vision care, and more.
• By contributing to an HSA before the year ends, you not only lower your current tax bill but also set aside funds for future healthcare needs. It’s a win-win for both your financial and physical health.

Retire in Style

Contributing to a retirement plan, such as a SEP IRA or Solo 401(k), can provide significant tax benefits. These contributions are tax-deductible and can substantially lower your taxable income.

Remember, you may contribute to a regular IRA all the way until April 15 of 2025 for the 2024 year. It’s a strategic move to consider before year-end. And for those with high incomes, be sure to consider a defined benefit plan.

Defer Income when Possible

In business, timing is everything. If you’ve had a stellar year and expect to be in a lower tax bracket next year, deferring income can be a smart tax planning strategy.

If you delay income that you expect to get in December until next year, even if it’s just until January, you can lower this year’s taxable income while potentially dropping you into a lower tax bracket next year. And by doing so, you might save big on taxes.

This strategy isn’t just about delaying payments, it’s about strategically managing your cash flow to minimize taxes. Talk to your clients early about invoicing flexibility, it just might save you thousands of dollars on your 2024 tax bill.

Plan for Estimated Tax Payments

Now for our last step. After you have reviewed your financial records and applied these tax savings strategies, if you feel like you might still owe the IRS money, consider making an estimated tax payment by January 15th.

By making an estimated tax payment, this can help you avoid unnecessary penalties and interest. As always, with proper planning, you can ensure you’re not caught off guard this tax season.

By following these simple steps, you’ll be well-prepared for tax season and can potentially reduce your tax liability.

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.