April 15th once again knocks at the door, reminding everyone of the urgency of the year’s final tax steps. Deadlines are fast approaching, and there are still a few crucial actions to take to lighten your taxes for 2024. It is essential to remain vigilant against tax scams that proliferate during this time.
For older adults and retirees, caution is advised. Jennifer Belmont Jennings, an attorney specializing in estate planning, emphasizes that the IRS never calls or sends emails or texts regarding tax matters. Generally, only an official letter is issued. Therefore, it is crucial not to respond to suspicious calls or messages and to verify any communication directly on the official site irs.gov.
An effective strategy to reduce your taxable income is to make qualified charitable distributions. If you receive RMD (Required Minimum Distributions) from your retirement accounts and you do not need these funds, you can direct part of this distribution to a recognized charitable organization. This approach, called QCD, allows you to satisfy your minimum obligations while supporting a cause that is important to you and reducing your tax burden.
Do not miss the opportunity to contribute to your IRA. For self-employed individuals and owners of single-member LLCs, you have until the tax filing date to make significant contributions. In 2024, the limit is $23,000, and you may also qualify for a catch-up contribution if you are 50 years or older.
Tax credits and deductions for older adults are valuable allies in reducing your tax bill. These benefits include credits for seniors or the disabled, deductions for qualified medical expenses, as well as exemptions specific to certain states. Additionally, if you are 65 or older, you may enjoy an increase in your standard deduction, and some localities offer property tax exemptions or freezes for seniors.
It is also crucial to prepare for the next year. Taking an inventory of your assets, ensuring that your accounts are correctly registered, and reviewing the beneficiaries of your accounts can help you avoid future complications. Particular attention should be paid to the impact of your income on Medicare premiums to avoid surcharges such as IRMAA.
Finally, seek assistance from tax experts rather than relying on advice found on social media. As Jennings points out, while professional tax preparers can provide in-depth advice, the information shared on platforms like TikTok is often inaccurate and can lead to costly mistakes. Consulting a qualified specialist ensures an accurate and optimized return.
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Last-minute tax measures to reduce your taxes in 2024
As the April 15th deadline for tax filing approaches, there are still a few last-minute tax initiatives you can take advantage of to lower your tax bill for 2024. Whether you are retired, self-employed, or simply looking for effective ways to optimize your finances, these strategies can make a significant difference.
How to avoid last-minute tax scams
The tax filing period is also prime time for tax scams specifically targeting older adults and retirees. Jennifer Belmont Jennings, an attorney specializing in estate planning, advises being vigilant against fraudulent attempts. “The IRS will never call you directly or send text messages. They generally use official mail,” she explains. It is crucial never to disclose your personal information via unsolicited phone, email, or SMS. Always check communications by going directly to the official website irs.gov.
During tax season, many scams arise, exploiting taxpayer fear and confusion. Stay informed and share these tips with your loved ones to ensure their financial security.
Qualified charitable distributions to optimize your taxes
If you receive required minimum distributions (RMD) from your retirement accounts but do not need these funds for living expenses, an effective strategy is to direct them straight to a qualified charitable organization. Greg Clement, a personal finance expert, emphasizes that this maneuver, known as QCD, allows you to meet your RMD obligations while reducing your taxable income. “It’s a neat way to support a cause that’s important to you while optimizing your tax return,” he adds.
This approach not only benefits your tax situation but also contributes to important social initiatives. For more information on tax strategies suitable for retirees, check out Tackling the Retirement Crisis.
Contribute to your IRA before the deadline
Do not miss the chance to make contributions to your IRA (Individual Retirement Account) before the tax filing deadline. In 2024, contribution limits reach $23,000 for self-employed individuals and single-member businesses. Additionally, catch-up contributions are available for those aged 50 and older, providing an extra $1,000.
These contributions can not only bolster your retirement savings but also offer immediate tax benefits. For workers using an employer-sponsored 401(k), make sure you have maximized your contributions by December 31st. Also, explore advanced retirement options to optimize your long-term finances.
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Maximizing tax credits and deductions for seniors
Older adults benefit from various tax credits and deductions that can significantly alleviate their tax burden. These benefits include credits for seniors or the disabled, deductions for qualified medical expenses, and specific advantages depending on the state. Greg Clement emphasizes the importance of understanding these options: “Maximizing these credits can substantially reduce your tax liability.”
Moreover, if you are 65 or older, you may be eligible for an increase in your standard deduction. Also, check if your area offers property tax exemptions or freezes for seniors, which can represent additional savings.
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Prepare effectively for the next tax year
It is essential to begin preparing now for the next tax year. Jennifer Belmont Jennings recommends doing an inventory of your assets, checking 1099 and K-1 forms for a clear view of your finances. Ensure your accounts are properly registered and that the beneficiaries are up to date. This preparation not only simplifies your next filing but also allows for proactive tax strategy planning.
Additionally, monitor your Medicare premiums, as higher income may trigger additional monthly adjustments (IRMAA). Evaluating your income and its potential impact on your health premiums is a crucial step to avoid unpleasant financial surprises.
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Get help from tax experts and avoid misleading advice
When it comes time to prepare your tax return, it is strongly recommended to seek assistance from tax experts rather than relying on advice found on social media. Jennifer Belmont Jennings emphasizes the importance of working with qualified professionals: “Certified tax preparers have expertise that you will not find on TikTok or other social platforms.”
The advice shared by unqualified individuals can be not only incorrect but also dangerous, leading to costly mistakes or audit risks. By hiring a tax expert, you benefit from a second opinion and assurance that your return is accurate and optimized. This can also help you discover deductions or credits that you might have overlooked.
For reliable resources and additional support, consider consulting organizations like AARP Foundation Tax-Aide, which offers free assistance to older adults.
By implementing these new last-minute tax initiatives, you can not only reduce your tax burden for 2024 but also prepare effectively for years to come. Stay informed, be vigilant against scams, and do not hesitate to consult experts to maximize your tax benefits.
