8 Tax Saving Options for Individuals

Have you filed your 2024 taxes yet?

If you want a professional to help you get your taxes calculated, filed, and documented correctly I got you. Reach out to my personal friend Mercedes, I literally send my friends and family to her since I don’t do tax prep myself. Like me, she is a CPA and has a Masters in Tax (we went to school together), so you are in great hands! You can find her contact info here.

Hi guys! Took a short break to get through my busy season, but we’re back!!

With the tax filing deadline around the corner, I know taxes are on everyone’s mind. So, I wanted to let you know 8 options that are available to individuals that can help lower that tax bill.

I think it’s important to point out that 2024 is over and that tax year closed. The time to lower your 2024 taxes was IN 2024, not when you go see your tax preparer. Because your preparer can only include on your return deductions and tax credits you are actually entitled to. you’re in luck though! Because two of the options below are still applicable for 2024, meaning they CAN still lower your 2024 taxes! Let’s find some tax savings👇

1. *Charitable Contributions - When you make qualified donations to charity, like property or cash, you may be able to deduct those donations from your taxable income. The donations must be made to a qualified charitable organization. This can be a great way to support an organization of your choice, while getting a tax deduction out of it. For more information, you can visit the IRS site or look up Publication 526.

2. *Mortgage Interest Deduction - If you own a home, and have a mortgage, you may be able to write off the interest and lower your taxable income. The mortgage must be a secured debt and must be on a qualified home. For 2024, you can deduct home mortgage interest on the first $750,000 ($375,000 if married filing separately) of indebt-edness. For more information, you can visit the IRS site or look up Publication 936.

3. Traditional IRA - Imagine being able to protect some of your income from getting taxed today, investing it for future you, and paying tax at retirement. That’s exactly what the traditional IRA is. Contributions you make to a traditional IRA may be fully or partially deductible, depending on your filing status and income. Generally, amounts in your traditional IRA (including earnings and gains) are not taxed until you take a distribution from the it. The 2024-25 contribution limit on IRAs is $7,000 ($8,000 if 50 or older). The 2024 contribution deadline is on April 15 2025, so you still have time to contribute! For more information, you can visit the IRS site or look up Publication 590-A.

4. Education Tax Credits - Going to school can be expensive! The good thing is, the government wants to help you with the cost.Thats why they offer you two education credits which reduce the amount of tax owed on your tax return. If the credit reduces your tax to less than zero, you may get a refund.These are the American Opportunity Tax Credit (AOTC), up to $1,000, and the Lifetime Learning Credit (LLC), up to $2,000. **Keep in mind there are requirements on WHO can claim these credits and HOW MUCH of a tax credit you can get. You can find more info on AOTC here and info on LLC here.

5. Child Tax Credits - The Child Tax Credit helps families with qualifying children get a tax break, and may even get of of the credit refunded. You may be able to claim the credit even if you don't normally file a tax return. For 2024, the maximum tax credit is $2,000 per qualifying child. To be a qualifying child for 2024, a child must, generally, be under 17 at the end of the year and have a valid social security number, along with various other requirements which you can find here. Like most tax credits, this is subject to income limitations.

6. 529 Plans - These are designed to help families pay for future expenses associated with college, tuition, or other qualified educational expenses, in connection with enrollment or attendance at an elementary or secondary public, private, or religious school for a designated beneficiary, such as a child or grandchild. While there is no federal tax deduction for contributing to such account there are many states that do offer a deduction. Earnings are not subject to federal tax and generally not subject to state tax when used for the qualified education expenses. For more information visit the IRS site or look up Publication 5834.

7. *Medical Expenses - You may be able to deduct the cost of medical, and dental, expenses you paid for yourself, your spouse, and your dependents during the year. The expenses must be considered qualified medical expenses and can cover anything from prescriptions, Dr. copays, glasses, therapy and so much more. This is limited to only the unreimbursed expense above 7.5% of your AGI. For more information visit the IRS site or look up Publication 502.

8. Health Savings Accounts (HSA) - HSA’s are meant to help you pay for medical expenses by giving you a tax deduction for them. Generally, when you contribute money to an HSA you get a tax deduction for your contributions and you are able to spend that money tax free provided it is spent on qualified medical expenses. You are also able to invest the money tax free. The tax free spending applies to any account earnings as well making it a triple tax savings account (1 tax deduction on contributions, 2 tax free growth, 3 tax free spend). For 2024 the contribution limit is $4,150 or $8,300 for family coverage. The 2024 contribution deadline is on April 15 2025, so you still have time to contribute! For more information visit the IRS site or look up Publication 969.

*These deductions are itemized deductions, thus, only available if you itemize your expense on schedule A.

As always, I hope you found this information useful and that it makes taxes a little bit less scary. Remember, tax law doesn’t JUST benefit the wealthy, it will benefit those who know how to use it.

See you next week!

-Neyra

*** Please remember that while I am a CPA, I am not YOUR CPA. This content is for educational purposes only, please seek the advice of tax, legal, and finance professionals on any financial decision you contemplate***