Here are a few of the moves I will be making to save on taxes in 2024. To give you some perspective, I am writing from the lens of a business owner with a 1099 and W2 income. If you are a W2 earner, some of what is written below may not apply to you.
Tax loss harvesting: this move consists of selling your losses in your taxable brokerage account to offset your income to save on taxes. The maximum for this year is $3,000. However, you can carry any losses over this amount forward for years beyond. However, you will most likely be limited to $3,000 annually.
Contribute the maximum to retirement accounts: As a high-income earner, any contribution you make to your retirement account will lower your taxable income. The US tax code is a progressive tax system. Therefore, the more you make, the more taxes will be required. However, the next dollar will be taxed differently from the previous. The maximum amount you can contribute to your 401K/403B in 2024 is $23,000. The maximum for a Solo-401k/Sep IRA is $69,000 ($23,000 for the employee portion and $46,000 for the employer portion). You can also max out your Traditional or Roth IRA. You may get a full or partial tax deduction for your traditional IRA contribution if you make less than $83,000 as a single filer or $240,000 as a married couple. ROTH accounts do not qualify for this deduction but remember you will have to pay taxes later on a traditional IRA. You will never pay taxes on Roth accounts 😉
Contribute the maximum limit to your HSA: the maximum you can contribute to a health savings account is $8300 for a family and $4150 for a single person. This account is only available to you if you have a high-deductible health insurance plan. If you qualify, it is another account that can be used to save for retirement. I call this account a triple threat account. You invest with pre-tax money, you can deduct large health expenses without paying taxes, and in retirement, you can deduct money without any taxes.
Deduct all ordinary and necessary business expenses for the year: if you earned any 1099 income or have a business/side hustle, you need to list all expenses required to run your business. Yes, technically, 1099 income is considered business income. Therefore you qualify for tax deductions such as the home office deduction (deduct a portion of your rent/mortgage if you have a dedicated home office you use for your business. In addition, expenses like your phone bill, laptop, office supplies, car (even maintenance), and clothes (scrubs for healthcare workers) are all fair game and allowed by the IRS.
Lastly, you want to plan for 2025. Write down your goals for 2025 and think of ways you plan to accomplish them.
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