As the tax filing deadline approaches, many are in a rush to submit their returns. However, there’s still time to maximize your deductions and minimize your tax bill. Here are three strategic moves you can make before April 15th:
1. Max out your IRA contributions
- Deadline: You have until April 15th, 2024, to contribute to your IRA for the 2023 tax year.
- Limits: The contribution limit is $6,500 ($7,500 if you’re 50 or older). For SEP IRAs, the limit is up to 25% of compensation or $66,000, whichever is less, with a compensation cap at $330,000.
- Impact: Contributions may lower your taxable income, potentially saving you a significant amount in taxes.
2. Fully fund your HSA
- Deadline: Similar to the IRA, the deadline for HSA contributions for the 2023 tax year is April 15th, 2024.
- Limits: The maximum contribution is $3,850 for self-only coverage and $7,750 for family coverage, with an additional $1,000 catch-up for those 55 and older.
- Benefits: Contributions are tax-deductible, and withdrawals for qualified medical expenses are tax-free. An HSA requires a high-deductible health plan (HDHP).
3. Consider itemizing deductions
- When to Itemize: If you have significant expenses in categories like charitable donations, state and local taxes, mortgage interest, or medical and dental expenses exceeding 7.5% of your AGI, itemizing could be more beneficial than taking the standard deduction.
- Standard Deduction for 2023: $13,850 for singles, $20,800 for heads of household, and $27,700 for married couples filing jointly.
While it’s easier to claim the standard deduction, taking a closer look at your potential itemized deductions could lead to greater tax savings. Before you finalize your tax return, reassess your deductions to ensure you’re leveraging every opportunity to reduce your taxable income.
Partner with Signet
Navigating the complexities of tax planning and maximizing deductions requires a nuanced understanding of tax laws and strategies. This is where Signet advisors can help. By partnering with Signet, you’ll gain the confidence that comes from having an expertly prepared tax strategy, optimized for savings and compliance. Contact a Signet advisor today, and take a critical step toward optimizing your financial future.