Tax Planning Tips for the Second Half of 2024

Tax Planning Tips for the Second Half of 2024

As the second half of 2024 unfolds, it's a crucial time to review and optimize your tax strategies. Whether you're handling personal taxes or managing a small business, proactive tax planning can save you money and reduce stress. Here are some key tips to help you navigate this process effectively.

Max Out Your 401(k)

One of the best ways to lower your taxable income and secure your future is by contributing to a 401(k) plan. For 2024, the contribution limit is $22,500 for those under 50, and $30,000 for those 50 and older. Maxing out your contributions not only benefits your retirement savings but also provides significant tax advantages now.

Utilize Flexible Spending Accounts (FSAs)

FSAs allow you to set aside pre-tax money for healthcare and dependent care expenses. Make sure to use these funds by the end of the year to avoid losing them. FSAs reduce your taxable income, providing a double benefit of tax savings and covering essential expenses.

Adjust Your Tax Withholdings

Mid-year is an excellent time to review your tax withholdings. Changes in income, marital status, or family size can impact your tax situation. Adjusting your W-4 form ensures you’re withholding the correct amount, helping you avoid a large tax bill or an overpayment refund come tax time.

Make Estimated Tax Payments

If you're a small business owner, estimated tax payments to federal and state governments are crucial. The next payment is due on September 15, 2024. Keeping up with these payments helps avoid penalties and interest, ensuring you stay in good standing with tax authorities.

Track Eligible Auto Expenses

For small business owners, tracking auto expenses can lead to substantial deductions. Eligible expenses include mileage for business travel, gas, maintenance, and insurance. Using apps like MileIQ or QuickBooks can simplify this process, ensuring accurate and efficient tracking throughout the year.