10 Year-End Tax Hacks to Maximize Savings and Prepare for IRS Changes in 2025

As the end of the year approaches, it’s time to tackle an essential task that often gets overlooked: tax planning. The decisions you make now can significantly impact your finances not just for this year, but for years to come. At Criterion Business Services, we believe in empowering business owners and professionals with actionable insights to save money and plan strategically.

Here are 10 detailed tax planning strategies you can implement now to end 2024 on a high note and prepare for the changes coming in 2025.

1. Maximize Retirement Contributions

Retirement accounts like 401(k)s and IRAs do more than secure your future they also help you save on taxes. Contributions to these accounts reduce your taxable income, meaning less money goes to the IRS.

• What to Do: Contribute as much as possible before December 31. The maximum limit for 401(k)s in 2024 is $22,500, with an additional $7,500 catch-up contribution if you’re 50 or older.
• Why It Matters: Every dollar you contribute now could mean big savings when tax season rolls around.

2. Harvest Capital Losses

If your investments didn’t perform as well as you’d hoped, there’s still a silver lining. Selling underperforming assets can offset your gains, reducing your taxable income.

• What to Do: Review your portfolio and sell any investments that have lost value.
• Pro Tip: You can deduct up to $3,000 of losses against ordinary income, and excess losses can be carried forward to future years.

3. Leverage Charitable Contributions

Giving to charity is a win-win. Not only do you get to support causes you care about, but you also get to lower your taxable income.

• What to Do: Donate cash, appreciated stocks, or other assets to qualified charities before December 31.
• Why It Matters: Donating appreciated assets lets you avoid capital gains taxes while claiming the full market value as a deduction.

4. Spend Down Your FSAs

Flexible Spending Accounts (FSAs) are a great way to save on medical expenses, but they come with a catch: unused funds typically don’t roll over.

• What to Do: Use your FSA funds for eligible expenses like prescriptions, eyeglasses, or medical treatments before the year ends.
• Why It Matters: Don’t let your hard-earned money go to waste!

5. Optimize Business Expenses

If you’re a business owner, year-end is the perfect time to optimize your spending. Prepaying certain expenses can lower your taxable income and give your business a head start for the new year.

• What to Do: Consider prepaying for office supplies, equipment, or software subscriptions.
• Why It Matters: This strategy helps reduce your tax liability while ensuring your business is ready to hit the ground running in 2025.

6. Adjust Your Tax Withholding

Have you had any major life changes this year, like getting married, having a child, or receiving a raise? If so, your tax withholding might need an update.

• What to Do: Use the IRS Withholding Estimator to check if you’re withholding the correct amount. Submit a new W-4 if adjustments are needed.
• Why It Matters: Proper withholding prevents a surprise tax bill or an oversized refund (which is essentially an interest-free loan to the IRS).

7. Tap Into Energy Tax Credits

Going green isn’t just good for the environment it’s also good for your wallet. The IRS offers generous tax credits for energy-efficient home and business upgrades.

• What to Do: Install solar panels, upgrade to energy-efficient windows, or set up an EV charging station.
• Why It Matters: These credits can significantly reduce your tax liability while boosting the value of your property.

8. Pay Estimated Taxes

If you’re self-employed or have additional income sources, paying estimated taxes ensures you stay on the IRS’s good side.

• What to Do: Make your fourth-quarter estimated payment by January 15, 2025. Use Form 1040-ES to calculate the amount.
• Why It Matters: Timely payments help you avoid penalties and reduce stress when filing your annual return.

9. Review Estate and Gift Tax Strategies

Estate and gift tax laws are set to change after 2025, so now is the time to plan for the future.

• What to Do: Use the $17,000 annual gift exclusion to transfer wealth to your loved ones tax-free. Consider funding 529 plans for education savings or exploring advanced strategies like irrevocable trusts.
• Why It Matters: The current estate tax exemption of $12.92 million per individual will drop significantly in 2026 unless Congress acts. Planning now can save your heirs from hefty tax bills later.

10. Plan for Tax-Advantaged Investments

Investing wisely isn’t just about growing your wealth it’s about growing it tax-efficiently.

• What to Do: Consider municipal bonds, opportunity zone investments, or real estate for their tax advantages.
• Why It Matters: Tax-advantaged investments can provide steady growth while reducing your overall tax burden.

Prepare for IRS Changes in 2025

The tax landscape is changing, and 2025 is set to bring significant shifts due to the expiration of key provisions from the Tax Cuts and Jobs Act (TCJA).

What’s Changing:

• Tax rates are expected to rise as the TCJA provisions revert to pre-2018 levels.
• The standard deduction will decrease, and estate and gift tax exemptions will drop dramatically.

Why You Should Act Now:

• Reassess your tax strategies: Deferring income, accelerating deductions, and maximizing tax-advantaged accounts are all smart moves to make in 2024.
• Stay informed: Work with a CPA or tax advisor to navigate these changes and minimize liabilities.

Final Thoughts

Year-end tax planning isn’t just about staying compliant with the IRS it’s about making smart financial moves that set you up for success in 2025 and beyond. These 10 strategies can help you save money, reduce stress, and take control of your financial future.

At Criterion Business Services, we’re here to help business owners and professionals navigate the complexities of tax planning with confidence. Whether it’s maximizing deductions, preparing for IRS changes, or optimizing your financial strategies, our team has your back.

Let’s start a conversation: Which of these year-end tax strategies resonates most with you? Share your thoughts in the comments or feel free to reach out.

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When it comes to taxes, a little planning now can make a big difference later. Let’s work together to wrap up 2024 on a high note.