Very (Very) Last-Minute Tax Moves for 2024

"We didn't lose the game; we just ran out of time." -Vince Lombardi

Because time is short, and some moves require more than this week to pull off, I'm restricting myself to those items you can realistically handle before the end of the year (Tomorrow).

This blog will be short and (hopefully) sweet to your wallet...

1) Use Your FSA Funds

Money set aside in a flexible spending account must be spent by the end of the year; otherwise, the funds are lost. However, using these funds can significantly reduce your taxable income, thereby lowering your tax bill. Some employers allow a two-and-a-half-month grace period. So check with your employer to see your personal deadline for utilizing your FSA savings.

2) Make an Extra Payment on Your Mortgage

If you own a house with a mortgage, and you can swing the cashflow hit, add an additional payment before year-end, and the interest on that payment will be deductible for 2024. Of course, that means it WON'T be so for 2025, but perhaps you can use this as an "extra" payment ... and get ahead of the escrow game.

3) Make the Switch to a Roth IRA

Taxes hit your Roth conversions in the year the conversion happens. However, taxpayers can undo part or all of that conversion by their filing deadline. They must first convert this year to undo part of their conversion next year retroactively. So, if you are on the fence about converting, consider taking the plunge before the end of the year, knowing that you (and/or WE) can re-characterize some or all of the amounts early next year.

4) GIVE

How do I feel about charitable giving now? This week, of course, is a big one for non-profits who are the happy beneficiaries of our last-minute donations.

You can pay early on a monthly gift or tithe or give a lump-sum gift. The purpose (aside from the many, many benefits to the organization and to you, of course) is to knock more income into a different tax bracket, perhaps, or to simply cut your tax bill, regardless of the bracket status. This means that by making a large charitable donation, you can potentially reduce your taxable income enough to move into a lower tax bracket, thereby reducing your tax liability.

Now, there are plenty of others. But these are the quickest and the easiest (aside, perhaps, from the Roth conversion -- but do that quickly).

Others:

• Max out personal gifts—if you have the means, you can give up to $18K ($36K for couples) tax-free to a family member or friend.
• Max out workplace retirement accounts (if you have one).
• Evaluate (quickly) what your income might look like in 2025, and try to accelerate or decelerate any income (that you can control) accordingly.

Hope this helps!

There will be more tax guidance in the future ... in 2025.

BE THE ROAR not the echo® HAPPY NEW YEAR!

Warmly, Janet and the crew