Deep Dive
Why should I adjust my paycheck withholding?
Adjusting paycheck withholding ensures you neither overpay nor underpay taxes, avoiding large refunds or unexpected bills.
How can deferring income help with taxes?
Deferring income to the next year can lower your current tax bill if you expect to be in the same or a lower tax bracket then.
What are the benefits of contributing to retirement accounts?
Contributing to traditional 401(k)s and IRAs can lower your taxable income this year, while Roth accounts offer tax-free growth and withdrawals.
What are RMDs and why are they important?
RMDs are required minimum distributions from retirement accounts for those 73 and older to avoid penalties; failing to meet them results in a 25% excise tax.
How does the gift tax exclusion work?
The annual gift tax exclusion allows you to give up to $18,000 per person in 2024 without tax; excess amounts apply to a $13.61 million lifetime exemption.
What are some year-end tax deductions and credits to consider?
Prepaying property taxes, making charitable contributions, and taking advantage of electric vehicle tax credits can reduce your taxable income or tax due.
What is a Roth conversion and why might it be beneficial?
A Roth conversion transfers funds from traditional to Roth retirement accounts, offering tax-free growth and withdrawals in retirement, though it requires paying taxes upfront.
Why should I consult a tax professional for my tax planning?
A tax professional can provide tailored strategies to save money on taxes now and in the future, ensuring you're fully prepared for tax season.
- Adjust paycheck withholding to avoid overpaying taxes or receiving large refunds.
- Aim for a tax liability close to zero.
- Understand self-employment tax implications for freelancers and those with side hustles.
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