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Tax Planning Tips

Tax Planning Tips to Aim to Minimize Savings Before April 15th

As the April 15th tax deadline approaches, now is the time to ensure you're taking advantage of every opportunity to potentially minimize your tax liability and avoid last-minute stress. Whether you're filing as an individual or a business, implementing smart tax planning strategies can help you save money and stay compliant with IRS regulations. Here are some essential tax tips to consider before the deadline.


Maximize Retirement Contributions

One of the best ways to reduce your taxable income is by contributing to tax-advantaged retirement accounts. If you haven't maxed out your contributions for the prior tax year, you can still make contributions until April 15th.  We’ve compiled a summary of retirement plan contributions for 2024 & 2025 here. (https://flatwater.bank/investments/our-solutions/contribution-limits)


Review & Claim Deductions & Credits

Tax deductions reduce the amount of your income subject to tax while tax credits reduce your tax bill dollar by dollar. Here are some common ones to check:

  • Student Loan Interest Deduction: You may deduct up to $2,500 in student loan interest.
  • Medical Expenses Deduction: If your medical expenses exceed 7.5% of your adjusted gross income (AGI), you might be eligible for deductions.
  • Education Credits: The American Opportunity Tax Credit (AOTC) and Lifetime Learning Credit (LLC) can help offset tuition and educational expenses.
  • Child Tax Credit (CTC): If you have dependent children, you may be eligible for up to $2,000 per child.
  • Earned Income Tax Credit (EITC): This credit benefits low- to moderate-income workers and can provide a substantial refund.
 
Organize Your Tax Documents
 
Make sure you have all necessary documents, including:
  • W-2s and 1099s for income reporting.
  • Receipts and records for deductible expenses.
  • Bank and investment statements to report interest, dividends, and capital gains.
 
Make an IRA or HSA Contribution
 
If you have a high-deductible health plan, you might qualify for a health savings account (HSA).  Your contributions to an HSA are pre-tax, which reduces your taxable income. The deadline for 2024 contributions is April 15th and limits are:
  • $4,150 for individuals.
  • $8,300 for families.
If you're 55 or older, you can contribute an additional $1,000.
 
Check for Estimated Tax Payments
 
If you’re self-employed or have income that isn’t subject to withholding (such as rental income or investments), ensure you've made sufficient estimated tax payments to avoid underpayment penalties.

 

E-File for a Faster Refund

Filing electronically with direct deposit is the fastest way to receive your tax refund. The IRS typically processes electronic refunds within 21 days, compared to paper returns, which can take much longer.

Proper tax planning before April 15th can save you money and stress. By maximizing deductions, contributing to retirement accounts, organizing documents, and filing on time, you can ensure a smoother tax season. If your tax situation is complex, consulting a tax professional can help you identify additional tax-saving strategies and avoid costly mistakes.

Do you need help with specific tax planning strategies? Let’s discuss!

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. 
 
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
 
This material was prepared by Nathan Wyatt for the Investment Service Center’s use.
 
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