Maximize Your Tax Savings: Essential Tips for Last-Minute Filers
Navigating the world of taxes can be daunting, especially if you haven’t yet filed your 2024 returns. However, time is still on your side! With a strategic approach, you can potentially lower your taxable income and maximize your savings. Let’s dive into some clever tips that can make all the difference.
Are There Opportunities to Reduce My 2024 Taxable Income?
Absolutely! If you meet certain criteria, you still have the opportunity to make tax-deductible contributions that can significantly lower your taxable income. According to Eva Simpson, Vice President of Member Value, Tax, and Advisory Services with the American Institute of Certified Public Accountants, the clock is ticking. You can make contributions to an Individual Retirement Account (IRA) or a Health Savings Account (HSA) by the April 15 tax deadline, and these can be applied to your 2024 tax year.
For your traditional IRA, you can contribute up to $7,000 if you’re under 50, and an additional $1,000 if you’re 50 or older. Keep in mind that the size of your deduction hinges on various factors, including your filing status and whether you or your spouse is enrolled in a retirement plan at work. For detailed contribution limits, check out this resource from Fidelity.
Additionally, if you possess a specific type of health insurance plan with a high deductible, your contributions to an HSA are also tax-deductible. For single coverage, you can contribute up to $4,150 in 2024, plus that coveted extra $1,000 if you’re over 55 — all before the filing deadline.
Can I Receive Tax Benefits for College Savings Accounts?
When it comes to saving for education, 529 college savings plans are a smart choice. While there’s no federal tax deduction for these contributions, some states offer attractive deductions or credits on your state taxes. In most cases, contributions must be made before the end of the calendar year to qualify.
However, states like Georgia, Indiana, Iowa, Kansas, Mississippi, Oklahoma, South Carolina, and Wisconsin allow you to make contributions up to the tax deadline and still receive a tax break for the prior year. For more insights into this opportunity, visit Saving for College.
What if I’m Feeling Overwhelmed and Not Ready to File?
We’ve all been there — the deadline looms large, and you’re not prepared. Fortunately, you can file for an extension until October 15. To secure this extension, simply submit Form 4868 by the April deadline. Keep in mind, however, that while an extension provides you extra time to file, it does not give you extra time to pay any taxes owed.
As noted by tax expert Ms. DiMaggio, it’s crucial to estimate your tax liability accurately and make an estimated payment with your extension request. Failing to do so can result in penalties — specifically, 0.5% of the tax owed for each month the balance remains unpaid, capping at 25%. For instance, if you owe $10,000, the penalties would pile up to $50 per month, ultimately hitting a maximum of $2,500.
In conclusion, even if the deadline is fast approaching, you still have options to ease your tax burden and potentially enjoy savings. By strategically contributing to accounts like IRAs and HSAs, leveraging tax breaks for educational savings, and understanding the extension process, you can take proactive steps towards a healthier financial future. Make the most of your last-minute efforts — your wallet will thank you!
