New Year… New Tax Planning

The stock market continues to rally, but interest rates and inflation are still running high. At this moment, our attention is shifting towards Tax season. Some of you may be putting off the dreaded task of preparing your tax returns or may not even know where to start. This year effective tax planning requires staying on top of the latest changes in tax rules that impact you. No matter where you are in your tax journey, the key is minimizing your taxes by implementing smart planning.

Here’s the good news, I’m privileged to have over 230 outstanding fiduciary advisors with deep expertise in tax planning within my network who want to share their best tips with you. I just sat down with two tax planning experts to uncover some of those new and important changes you should be aware of this year and explain why working with a fee-only, fiduciary advisor may be the answer to all your problems this tax season. Meantime, these are the need-to-know tax tips for 2024…

For Those Under Age 35

You may be starting a new job, changing jobs, or pursuing higher education. You may also be saving for a home, a car, or a vacation. Here are some tax tips for you coming from Jason McWilliams, CPA, CFP® of JRM Tax & Wealth Management in Philadelphia and Kevin Feig, CPA, CFP® of Walk You To Wealth in Boston:

Take advantage of tax-advantaged retirement accounts

  • If your employer offers a 401(k) plan, you can contribute up to $23,000 in 2024. If you don’t have access to a 401(k) plan (or if you want to save more for retirement in addition to your employer’s plan) you can open an individual retirement account (IRA) and contribute up to $7,000 in 2024. You can choose between a traditional IRA, which offers an immediate tax deduction, or a Roth IRA, which offers tax-free growth and withdrawals in retirement. Depending on your income, you may also qualify for a retirement savings credit on your tax return!

Claim education credits and deductions

  • If you are enrolled in an eligible college or university, you may qualify for one of two education credits: the American Opportunity Tax Credit (AOTC) or the Lifetime Learning Credit (LLC). The AOTC is worth up to $2,500 per year for the first four years of undergraduate education, while the LLC is worth up to $2,000 per year for any level of education. You may also qualify to deduct the interest paid on your student loans.

Report your income from side gigs and online platforms

  • If you earn money from freelancing, food delivery, rideshare, or selling goods and services through a third-party network (such as PayPal, Venmo, or Cash App), you may receive a Form 1099-K from the payment processor. You must report this income on your tax return and pay self-employment taxes on it. However, you can also deduct your business expenses, such as supplies, equipment, advertising, and mileage.

Prioritize investing in a Health Savings Account (HSA)

  • These accounts allow you to defer taxes on your contributions, similar to a 401(k), but then withdraw money tax-free, similar to a Roth IRA, as long as the money is used for qualified medical expenses. In summary, you may never have to pay taxes. As an added benefit, your employer may also provide a contribution. The only downside is that you will need to pay for non-preventative medical expenses out-of-pocket, but hopefully these are fairly minimal at this stage of life. The HSA contribution limits for 2024 are $4,150 for individuals and $8,300 for families.

If You’re Mid Career and Under Age 50

You may be in your peak earning years, raising a family, or paying off debt. You may also be planning for your children’s education, your retirement, or your legacy. Here are some tax tips for you:

Claim child-related tax benefits

  • If you have dependent children under the age of 17, you may be eligible for the child tax credit (CTC), which is worth up to $2,000 per child in 2024. You may also qualify for the child and dependent care credit which helps you cover the cost of child care while you work or look for work. If you are saving for your child’s education, consider funding a 529 account which allows that money to grow tax-free, some states also offer a tax deduction for contributing.

Consider itemizing your deductions

  • If your total deductions exceed the standard deduction, which is $14,600 for single filers or $29,200 for married couples filing jointly in 2024, you may benefit from itemizing your deductions. Some of the common itemized deductions include mortgage interest, state and local taxes, charitable contributions, and medical expenses.

Reduce your tax expense

  • You are about to enter your peak earnings phase of life, so it’s key to reduce your current tax expense as much as possible. This may include maximizing your employer sponsored retirement plan (e.g., 401(k), 403(b)) as well as your Health Savings Account. 

Consider a backdoor Roth contribution

  • Additionally, if you are over the earnings limit to contribute to a Roth IRA, you should consider a backdoor Roth contribution.

For Those About to Retire

You may be nearing the end of your career, preparing for retirement, or transitioning to a new phase of life. You may also be facing some major financial decisions, such as when to claim Social Security, how to withdraw from your retirement accounts, or whether to relocate. Here are some tax tips for you:

Delay your Social Security benefits

  • If you are eligible for Social Security benefits, you can start receiving them as early as age 62, but your monthly amount will be reduced by up to 30%. If you wait until your full retirement age, which is between 66 and 67 depending on your birth year, you will receive your full benefit. If you delay further until age 70, you will receive an 8% increase for each year you wait.

Plan your retirement income strategy

  • When you retire, you may have multiple sources of income, such as Social Security, pensions, annuities, dividends, interest, and withdrawals from your retirement accounts. Each source may have different tax implications, so you need to plan your income strategy carefully. For example, you may want to withdraw from your taxable accounts first, then your tax-deferred accounts, and finally your tax-free accounts, to minimize your tax burden and extend the life of your savings.

Review your state tax situation

  • If you are thinking of moving to another state in retirement, you should compare the tax systems of your current and potential states. Some states have no income tax, some have lower income tax rates, and some offer generous exemptions for retirement income. Some states also have different sales tax, property tax, and estate and/or inheritance tax rates. For example, an individual may exclude $250,000 of capital gains from the sale of their primary residence, and $500,000 for couples. You should weigh the pros and cons of each state and factor in the cost of living and quality of life.

Maximize retirement account catch-up contributions

  • These special contributions allow those who are age 50 or over to add additional money to retirement accounts, such as $7,500 in 401(k) catch-up contributions, raising your 401(k) limit to $30,500 for 2024.

For Those Already Retired

As a retiree, you may be enjoying your golden years, pursuing your hobbies, or traveling the world. You may also be managing your retirement income, supporting your family, or giving back to your community. Here are some tax tips for you:

Take your required minimum distributions (RMDs)

  • If you have money in a traditional 401(k) or IRA, you must start taking required minimum distributions when you reach age 73. The RMD is the minimum amount you must withdraw from your account each year, based on your account balance and life expectancy. If you fail to take your RMD, you will face a 25% penalty on the amount you should have withdrawn.

Make qualified charitable distributions

  • If you are charitably inclined, you may want to consider making qualified charitable distributions (QCDs) from your traditional IRA. A QCD is a direct transfer of funds from your IRA to a qualified charity, up to $105,000 for 2024. A QCD counts toward your RMD, but it is not included in your taxable income. This can lower your tax bill and reduce the impact of your RMDs on other tax benefits. 

Update your estate plan

  • If you have a sizable estate, you may want to update your estate plan to ensure that your assets are distributed according to your wishes and that your heirs pay the least amount of taxes possible. The federal estate tax exemption for 2024 is $13.6 million per person, which means that only estates worth more than that amount are subject to the 40% estate tax. However, some states have lower estate tax exemptions or impose inheritance taxes on the recipients of your estate. You may want to consult a tax professional or an estate planning attorney to explore your options. 

Assess your income levers

  • These levers may include pensions, social security, part-time work, as well as investment income. 

Evaluate your social security withdrawal strategy

  • Consider altering your social security withdrawal strategy along with your overall portfolio and life expectancy to determine the optimal time to claim your benefits.

What Should You Do Next?

Keep in mind, your situation will determine exactly which tips apply to you most. If you’re looking for further help and guidance on how to effectively manage tax season this year then it might be wise to consult a fee-only, fiduciary financial advisor who specializes in tax planning. I founded Wealthramp to help people just like yourself find the right financial advisors who are held to a fiduciary obligation to provide you financial advice that is in your best interest. Every member of the Wealthramp advisor network is personally interviewed and evaluated by myself. I’d encourage you to check out how the Wealthramp process works and learn more about how a fiduciary advisor can help you this tax season.

This article is not intended to be tax advice, and you should always consult a qualified tax professional before making any tax-related decisions.


If you’re thinking about working with a financial advisor, Wealthramp is here to help you find a truly qualified advisor with deep expertise in tax planning like Jason and Kevin.

Get matched and schedule your free meeting today!

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