COLORADO SPRINGS — It's 1:00am the day before New Year's Eve and the thought of reducing your taxable income might be keeping you up, well probably not, but there are a few steps you can take in the final hours of 2024 to try and save some money before tax time.
"That’s never the best time to strategize for tax planning," Brandon Lockhart, a CPA and partner at Lockhart & Powell Certified Public Accountants in Colorado Springs said about the final hours of 2024, "I would analyze whether or not you paid any student loan interest I would make sure on any of your retirement contributions just make sure those are all maxed out so that you’re getting those deductions."
The bottom line is that if you have the funds to move into a retirement account such as an IRA, it could be done in the final hours of 2024 to reduce your taxable income. Other options may be limited.
When it comes to filing, federal filing will either be done with a standard or itemized deduction to lower your taxable income. Standardized deduction is the most common, but others will choose to itemize if it gives them a lower deduction. Some taxpayers are also required to file with an itemized deduction. According to the Internal Revenue Service (IRS) those include the following:
- You are a married individual filing as married filing separately whose spouse itemizes deductions.
- You are an individual who files a tax return for a period of less than 12 months because of a change in your annual accounting period.
- You were a nonresident alien or a dual-status alien during the year. However, nonresident aliens who are married to a U.S. citizen or resident alien at the end of the year and who choose to be treated as U.S. residents for tax purposes can take the standard deduction. For additional information, refer to Publication 519, U.S. Tax Guide for Aliens.
- You are filing as an estate or trust, common trust fund, or partnership.
Charitable contributions are also one way you can save some money on your taxes. Lockhart said while it applies to those who are filing with an itemized deduction, it can also help taxpayers in Colorado.
"Your charitable contributions are an itemized deduction, so they go into that pool as well take the standard deduction if you find it most advantageous to take the standard deduction you can still deduct that on the state side,” Lockhart said.
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