How to Maximize Your Tax Deductions for 2024

Tax season often brings a mix of anticipation and anxiety. Will you owe money to the IRS, or are you expecting a refund? One way to sway the outcome in your favor is by understanding and utilizing tax deductions effectively. Let's explore the key deductions available for the 2024 tax year and how they can help reduce your taxable income.

What Are Tax Deductions?

Tax deductions lower your taxable income, which can decrease the amount of tax you owe. There are two primary types:

• Standard Deduction: A fixed amount that reduces your income. For 2024, the standard deduction amounts are:
• Itemized Deductions: Specific expenses you can deduct, such as mortgage interest, property taxes, and charitable contributions. Itemizing is beneficial if your deductions exceed the standard deduction.

Note: Tax deductions differ from tax credits. While deductions reduce taxable income, credits directly reduce the tax you owe.

Calculating Your Adjusted Gross Income (AGI)

Your AGI is your total income minus certain adjustments, serving as the basis for calculating taxable income. Common adjustments include:

• Student Loan Interest: Deduct up to $2,500 if you meet income requirements.
• Health Savings Account (HSA) Contributions: Contributions are deductible if you have a high-deductible health plan.
• Traditional IRA Contributions: Depending on your income and retirement plan, contributions may be deductible.

Standard vs. Itemized Deductions

Choosing between the standard deduction and itemizing depends on your financial situation:

• Standard Deduction: Simpler and often more beneficial for those with fewer deductible expenses.
• Itemized Deductions: May be advantageous if you have significant expenses in areas like mortgage interest, property taxes, medical expenses, or charitable donations.

Common Itemized Deductions for 2024

If you opt to itemize, consider these deductions:

1. Mortgage Interest: Deduct interest on mortgage debt up to $750,000.
2. Property Taxes: Deduct state and local taxes, including property taxes, up to $10,000.
3. Charitable Contributions: Deduct donations to qualified organizations, subject to certain limits.
4. Medical Expenses: Deduct unreimbursed medical expenses exceeding 7.5% of your AGI.

Above-the-Line Deductions

These deductions can be claimed regardless of whether you itemize:

• Educator Expenses: Teachers can deduct up to $250 for classroom supplies.
• Self-Employment Expenses: Deduct home office expenses, health insurance premiums, and business-related mileage.

Take Control of Your Tax Situation

Maximizing deductions is just one part of a comprehensive financial strategy. If you're unsure about the best approach for your situation, scheduling a consultation with a knowledgeable financial professional can help ensure you're making the most tax-efficient decisions.

I offer complimentary wealth strategy calls to help you understand tax-efficient investing and planning for long-term financial security. Schedule a time to chat and take the next step toward financial confidence.

Plan Right. Live Better. - Mateo

Disclaimer: This article is for informational purposes only and should not be considered tax, legal, or financial advice. Individual financial situations vary, and it is recommended to consult with a qualified tax professional or financial advisor before making any tax-related decisions. The information provided is based on current tax laws and regulations, which are subject to change. No guarantees are made regarding the accuracy or completeness of this information.