Top 5 Tax Tips for Individuals in 2024
The 2024 tax season is approaching, and you might be wondering how to prepare your taxes and save money now and in the upcoming tax seasons. Whether you are a salaried employee, a self-employed professional, or a retiree, there are some tax tips that can help you reduce your tax bill and avoid common tax mistakes.
Here are the top 5 tax tips for individuals in 2024:
1. Contribute to your retirement accounts
One of the best ways to lower your taxable income and save for your future is to contribute to your retirement accounts, such as a 401(k), an IRA, or a Roth IRA. These accounts allow you to defer or avoid taxes on your contributions and earnings, depending on the type of account.
For 2024, the contribution limits are $23,000 for 401(k)s, $7,000 for IRAs, and $8,000 for IRAs if you are 50 or older. You can also make catch-up contributions if you missed some years in the past. However, you need to make your contributions by the deadline, which is usually December 31 for 401(k)s and April 15 for IRAs.
For 2023, the contribution limits are $20,500 for 401(k)s, $6,000 for IRAs, and $7,000 for IRAs if you are 50 or older. You can still contribute to your 401(k)s until December 31, and you have until April 15, 2024 (IRAs) to contribute and save on 2023 taxes.
2. Claim your deductions and credits
Another way to reduce your tax bill is to claim all the deductions and credits that you are eligible for. Deductions are expenses that you can subtract from your income, such as mortgage interest, property taxes, medical expenses, and charitable donations. Credits are amounts that you can subtract from your tax liability, such as the child tax credit, the earned income tax credit, the education tax credit, and the health care tax credit.
However, you need to have proper documentation and follow some rules and limitations to claim these benefits. You also need to decide whether to itemize your deductions or take the standard deduction, which is $13,850 for single filers and $27,700 for married couples filing jointly in 2023.
In 2024, the standard deduction will be $14,600 for single filers, $29,200 for married couples filing jointly, and $21,900 for head of household.
3. Adjust your withholding and estimated taxes
If you are a salaried employee, you can adjust your withholding to match your tax liability and avoid underpaying or overpaying your taxes. You can use the IRS withholding calculator to estimate your tax liability and adjust your Form W-4 accordingly. Do this at the beginning of 2024.
You can also claim allowances or request additional withholding if you have other sources of income or deductions. If you are a self-employed professional, you need to pay estimated taxes every quarter to avoid penalties and interest. You can use the IRS Form 1040-ES to calculate your estimated taxes and pay them by the deadlines, which are April 15, June 15, September 15, and January 15, 2025.
4. File your taxes electronically and on time
One of the easiest and fastest ways to file your taxes is to file them electronically using the IRS Free File program or a reputable tax software. Filing electronically allows you to avoid errors, get your refund faster, and receive confirmation of your filing. You can also file an extension if you need more time to prepare your taxes, but you still need to pay your taxes by the deadline, which is April 15, 2025 (for tax year 2024) and April 15, 2024 (for tax year 2023). If you file late or fail to pay your taxes, you could face penalties and interest, which could increase your tax bill.
5. Hire a tax professional if you need help
If you have a complex tax situation or need help with your tax planning and preparation, you may want to hire a tax professional to assist you. A tax professional can help you identify and implement the best tax strategies for your situation, and ensure that you file your tax return accurately and on time. They can also help you deal with any tax issues that may arise, such as audits, notices, or amendments.
However, you need to be careful and do your homework before you hire someone. You need to check their credentials, experience, reputation, and fees, and make sure that they have a Preparer Tax Identification Number (PTIN), which they must include on your tax return.
P.S. if you want to hire a reputable tax professional, you can hire me and join my clients, some who have been with me for the past 5 years. I am an IRS Enrolled Agent with over 10 years’ experience. Contact my team now to book an appointment.
Frequently Asked Questions
- How can I lower my personal taxes?
You can reduce your personal tax liability by accruing tax-free income, leveraging applicable deductions and credits, and fine-tuning your withholding and estimated taxes.
- How do I maximize my tax return for a single person?
To optimize your tax return as a single individual, consider itemizing deductions if they exceed the standard deduction, claiming all eligible tax credits, contributing to retirement and health savings accounts, and filing electronically and on time.
- What is a good tax tip?
A valuable tax tip is to consistently track your income and expenses, plan ahead for significant life changes, seek guidance from a tax professional when needed, and periodically review your tax situation to avoid unexpected surprises.
- What are the new tax brackets for 2024?
The 2024 tax brackets, adjusted for inflation, are as follows: 10% for incomes up to $11,600 ($23,200 for married couples filing jointly), 12% for incomes over $11,600 ($23,200 for joint filers), 22% for incomes over $47,150 ($94,300 for joint filers), and so forth.
- How can I adjust my taxes to get more money?
Adjusting your taxes for increased returns can be achieved by modifying your W-4 form to reduce claimed allowances, requesting additional withholding, or paying more estimated taxes if you’re self-employed.
- Will tax returns be bigger in 2024?
In 2024, some taxpayers may experience larger tax returns due to falling into lower tax brackets from inflation adjustments or qualifying for increased tax credits and deductions. However, inflation might also diminish the purchasing power of refunds and elevate the cost of living. Top of Form
