The end of the year is the perfect time to review your financial situation and implement last-minute strategies to reduce your tax bill. Many taxpayers believe their tax return is set in stone, but by taking action🌃 before Dec. 31, you can imp♔rove your tax outcome.

Here’s a checklist to guide you through the process of preparing for the 澳洲幸运5官方开奖结果体彩网:tax season and maximizing your ꦡpotential tax savings. Keep in mind that you can use these tips any time of the year, so you don’t just have to consider them at the end of the year.

1. Know Your Filing Status

There are several ways to file your taxes. Depending on your marital status and dependent situation, you can file as one of the fo🐎llowing:

• 澳洲幸运5官方开奖结果体彩网:Single filer
• 澳洲幸运5官方开奖结果体彩网:Head of household
• 澳洲幸运5官方开奖结果体彩网:Married filing separately
• 澳洲幸运5官方开奖结果体彩网:Married filing jointly

Each has different 澳洲幸运5官方开奖结果体彩网:tax bracket income thresholds, standard 澳洲幸运5官方开奖结果体彩网:deductions, and eligibility for certain 澳洲幸运5官方开奖结果体彩网:tax credits.

2. Review Retirement 𝓀Contributions and Distributio♓ns

Pay attention to your annual 澳洲幸运5官方开奖结果体彩网:contribution limits for employer-sponsored retirement accounts such as 401(k)s and 403(b)s. For most employees, the limit is $23,000 for 2024 ($23,500 for 2025). There is a special allowance for an additional $7,500 澳洲幸运5官方开奖结果体彩网:catch-up contribution for employees age 50 or older. You may also be eligible to deduct contributions to a traditional 澳洲幸运5官方开奖结果体彩网:individual retirement account (IR🐭A) if you meet certain conditions.

Be sure you take the 澳洲幸运5官🐭方开奖结果体彩网:required minimum d🗹istributions (RMDs) from your retirement account if you reach the required age. You will be required to start withdrawing on April 1 the year after you turn 73. The rules are in effect as of Jan. 1, 2023, according to the 澳洲幸运5官方开奖结果体彩网:SECURE 2.0 Act. If you turned 72 anytime from Jan. 1, 2020, to Dec. 31, 2022, you must take RMDs beginning April 1 the year after you turn that age.

3. Decide: Itemized or Standard Deduction?

It’s beneficial to add up your potential 澳洲幸运5官方开奖结果体彩网:itemized deductions before the end of the year to plan whether you might itemize or take the 澳洲幸运5官方开奖结果体彩网:standard deduction. If your i♔temized deductions exceed the standard deduction for your tax statu𒀰s, you should itemize expenses on your tax return.

Here’s the standard deduction amount:

• Single: $14,600 for 2024 ($15,000 for 2025)
• Head of household: $21,900 for 2024 ($22,500 for 2025)
• Married filing separately: $14,600 for 2024 ($15,000 for 2025)
• Married filing jointly: $29,200 for 2024 ($30,000 for 2025)

4. Bunch Medical Expenses in One Year

If you plan to itemize deductions, consider bunching medical expenses into the current year (before Dec. 31) to meet the IRS threshold. Medical expenses are deductible to the extent they exceed 7.5% of your adjusted gross income (AGI).

If your AGI is $50,000 and you have $7,000 in qualified expenses, you don’t get to deduct $7,000 from your 澳洲幸运5官方开奖结果体彩网:taxable income. Instead, you can only deduct the expenses that exceed 7.5% of your income. Since 7.5% of $🅘50,000 is $3,750, you can deduct $7,000 minus $3,750, or $3,250.

It’s better to claim something than to🌱 miss out on this deduction entirely. So, November–December is a good time to look at your actual medical expenses for the current year and your anticipated medical expenses for the upcoming year.

If you’re close to crossing the 7.5% threshold for the current tax year, move your purchases of eyeglasses, dentist and doctor visits, surgical procedures, and other medical and dental expenses to December to gain a tax deduction, advises , author of the book “Tax This! An Insider’s Guide to Standing Up to the IRS” and a former senior trial attorney for the 澳洲幸运5官方开奖结果体彩网:Internal Revenue Service (IRS)🔜. Likewise, if you have few medical and dental expenses for the current tax year, defer whꦡat you can until the next one.

Numerous voluntary medical costs are tax-deductible, including LASIK eye surgery, doctor-prescribed weight loss programs, smoking cessation programs (but not patches or gum), and capital expenses for ramps, railings, and other features installed in a home to accommodate disabilitꦑies.

5. Consider Next Year’s Tax Brackets

Before bunching expenses togethe♔r, taxpayers should consider their overall tax brackets for this tax year and next year, Estill ꧙says.

“For instance, if I know my income will go up next year and thus I will be in🌠 a higher tax bracket, it may make sense to wait until next year to take the deduction because it will be worth more to me as a percentage of my income,” he says.

If you were in the 12% bracket in 2024 but might be in the 22% bracket in 2025, your deductions will be worth more in 2025. A major tax bracket change might apply if you were, say, 澳洲幸运5官方开奖结果体彩网:unemployed for a chunk of 2024 bu🌟t then started𒅌 a new job, among other possible scenarios.

“Likewise,☂ if my income is expected to go down next year, it may make sense to try to accelerate the purchases into the current tax year,” Estill adds. This could happen if you know, for example, that you’re going to retire next year.

6. Beware the Alternative Minimum Tax

The common advice to shift expenses, such as prepayment of property or state taxes, from January to December to get the tax deduction a year earlier can backfire if you end up being subject to the alternative minimum tax (AMT). But what is this tax?

According to the IRS, “Under the tax law, certain tax benefits can significantly reduce a taxpayer’s regular tax amount. The alternative minimum tax (AMT) applies to taxpayers with high economic income by setting a limit on those benefits. It helps to ensure that those taxpayers pay at least a minimum amount of tax.”

Determining if the AMT applies to you is tricky and may require professional tax assistance. If it does, you’ll need to rethink⛄ your tax minimization strategy. “If you are subject to AMT, the benefit of being able to deduct property taxes disappears. It may be more advantageous to wait until next year to make the payment. Make sure you consult with a tax professional before you assume prepayment will result in income tax savings,” Estill says.

He adds that the same is true of state income taxes for the fourth quarter of the current tax year, which you might elect to pa🌸y in December instead of January.

The Bottom Line

Waiting until the last minute to address your taxes can result in missed opportunities. By reviewing your financial situation now, you can implement last-minute strategies to 澳洲幸运5官方开奖结果体彩网:minimize your tax bill and maximize savings. Keep these tips i♌n mind to make sure you’re taking full advantage of available deductions and credits.

Remember, year-round tax planning with the help of a professional is the best way to 澳洲幸运5官方开奖结果体彩网:avoid surprises come tax time.