4 Last-Minute Tax Strategies to Lower Your 2024 Bill

Jason Branning

Tax season is in full swing. You might find yourself wondering, “Is there anything I can do to lower last year’s tax bill?” While many tax-saving strategies need to be implemented before the year-end, there are still a few smart moves you can make now to reduce what you owe.

Here are 4 practical ways to lessen your 2024 tax burden and keep more of your hard-earned money in your pocket. Keep in mind that these moves must be taken before you actually file your 2024 tax return.

1. Contribute to Your IRA

If you haven’t reached the contribution limit for your Traditional IRA ($7,000 in 2024), there’s still time! You have until April 15th to make contributions that count for the 2024 tax year.

Traditional IRA contributions are tax-deductible, which means they lower your taxable income.

Here’s a practical example:

Let’s say you earned $90,000 last year and contribute $7,000 to a Traditional IRA before the tax deadline. Your taxable income drops to $83,000 which reduces your overall tax bill while also boosting your retirement savings.

PSA: Be sure to code the contributions for 2024. Custodians (e.g. Fidelity or Schwab) auto-assign the contribution year as the current year unless you specify otherwise.

2. Contribute to Your HSA

Similar to your IRA, HSAs allow contributions up until April 15th.

There’s not another account out there like an HSA! Contributions are triple-tax advantaged. This means that contributions are tax-deductible, grow tax-free, and allow tax-free withdrawals for qualified expenses. Want to learn more about HSAs? Here’s the full rundown!

3. Contribute to Your Child(ren)’s 529 Account

In Mississippi, you can make contributions to your child’s education funding account(s) until the tax deadline.

While this will not lower your federal taxable income, it can potentially lower your state liability.

If you are a married couple, you can deduct up to $20,000 of contributions each year. Once caveat: the 529 account must be opened during the previous year (i.e. 2024 or earlier) in order to fund it in the spring of the next year.

Check your specific state’s 529 program to see if you’re eligible to make prior-year contributions before April 15th.

4. For Those Who Itemize

Check for overlooked deductions and credits that could lower your tax bill.

  • Charitable Donations: Donations to qualified organizations can be deducted. Remember, how you donate matters. Strategies like using donor-advised funds, bunching donations, or donating appreciated assets may help maximize your deductions.
  • Mortgage Interest: You may deduct interest on loans up to certain limits. You might be able to deduct mortgage insurance premiums as well.
  • Out-of-Pocket Medical Expenses: You can deduct medical expenses that exceed 7.5% of your AGI.
  • State and Local Taxes (SALT) Deduction: You can claim a deduction of up to $10,000 for state and local taxes. This includes various taxes such as state income taxes, property taxes, and certain other local taxes.

These deductions can add up, so it’s worth looking into. Just remember, to claim most of these, you’ll need to itemize your deductions instead of taking the standard deduction ($29,200 for married filing jointly in 2024). Fun fact: ≈90% of tax filers take the standard deduction!

Tax planning is a crucial part of your overall financial plan. By making the right choices on how to optimize your tax situation year after year, you can keep more money in your pocket over the course of your life. Take time today to ensure you’re making the most of the available tools to your advantage.

Johnson is a fee-only, fiduciary financial advisor with Asset Dedication LLC, DBA Branning Wealth Management. He provides hands-on, practical financial advice for millennials and young families. He is a board member of the Financial Planning Association of Mississippi.

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