How to Reduce Your Tax Bill or Boost Your Refund Before the Deadline

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The tax deadline is quickly approaching! ? If you’re looking for ways to reduce your taxable income, maximize deductions, and increase your refund, there’s still time to act. Smart tax planning now can lead to significant savings. Here’s what you need to know:

1. Choose the Right Filing Status

Your filing status determines your tax rate, deduction amount, and eligibility for certain credits. Married couples should compare Married Filing Jointly vs. Married Filing Separately, while single parents may benefit from Head of Household status. Choosing the right one could save you thousands!

TIP: Head of household can very possibly be used if you have an eligible qualifying relative?such as a parent; even if they don't live with you but you support them. Or maybe you're taking care of a grandchild?

2. Maximize Tax Deductions

You can take the standard deduction or itemize deductions, depending on which provides the biggest benefit. The 2024 standard deduction amounts are:

• Single: $14,600
• Married Filing Jointly: $29,200
• Head of Household: $21,900

If you own a home, have high medical expenses, or donate to charity, itemizing might be the better choice so run the numbers both ways.

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3. Use Donor-Advised Funds (DAFs) for Charitable Giving

Want to be generous and strategic? A Donor-Advised Fund (DAF) allows you to:

??Donate cash or appreciated assets (like stocks) for an immediate tax deduction

?? Bunch charitable contributions into one year to exceed the standard deduction

?? Reduce capital gains taxes on donated investments

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4. Contribute to Retirement Accounts

One of the best ways to lower taxable income and save for the future is through retirement contributions and many folks are not taking advantage of this:

• Traditional IRA: Contribute up to $7,000 (or $8,000 if 50+) before the tax deadline for a deduction.
• 401(k) contributions: If your employer allows, maximize your pre-tax contributions ($23,000, or $30,500 if 50+).
• Spousal IRA: If your spouse isn’t working, you can still contribute up to $7,000 (or $8,000 for 50+) to an IRA on their behalf—doubling your household tax-deferred savings.

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5. Claim Valuable Tax Credits

Unlike deductions, tax credits provide a dollar-for-dollar reduction on taxes owed. Some even result in a refund! ? Earned Income Tax Credit (EITC) – Up to $7,830 for lower-income taxpayers ? Child Tax Credit – Up to $2,000 per child, with $1,700 refundable ? Saver’s Credit – Up to $2,000 for eligible retirement contributions

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6. Reduce your potential Alternative Minimum Tax (AMT) when exercising stock options with a Roth IRA Conversion

Incentive stock options are not subject to ordinary income tax on exercise,?however the spread between the strike price and fair market value of the stock at exercise is subject to the alternative minimum tax (AMT) on exercise. Because of the differences in tax rates, a Roth conversion can actually help reduce potential or avoid AMT.

Work with a CFP? and with Tax planning software to help identify these guardrails and take control of potential AMT.

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7. Avoid Costly Tax Filing Mistakes

Errors can delay refunds or even flag an IRS audit. Be sure to:

?? Double-check filing status, names, and Social Security numbers

?? Report ALL sources of income, including freelance work

?? File electronically & choose direct deposit to speed up your refund

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8. File Electronically and Opt for Direct Deposit

Filing electronically and choosing direct deposit can expedite your refund. The IRS reports that electronic filers who opt for direct deposit often receive their refunds within 21 days. This method also reduces the risk of lost or stolen checks.

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9. Stay Updated on Tax Law Changes

Tax laws evolve every year! In 2024, key changes include:

? Higher standard deductions due to inflation

? Updated tax brackets

? Phase-out limits for credits like the Child Tax Credit

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Final Thoughts

With a little planning, you can reduce your tax burden, increase savings, and keep more of your hard-earned money. From choosing the right filing status to maximizing deductions, credits, and retirement contributions, these strategies can help lower your tax bill before the deadline.

?? Need help? Consult a tax professional to ensure you’re taking advantage of every opportunity.

?? What’s your go-to tax-saving strategy? Share your thoughts in the comments!

?? Read the full article with more detail here: https://tinyurl.com/3yuckbpy

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