As 2024 unfolds, it’s easy to overlook the impact your current actions may have on your tax refund for 2025. While diving headfirst into tax planning might not be on your agenda just yet, here are six insightful tips to dip your toes into tax preparation waters for the upcoming season and secure your largest tax refund to date.
Stay Organized:
– Kickstart your tax preparation journey simply by staying organized. Begin by creating a folder for essential documents and financial records. This small step will give you a head start when tax time rolls around next year. If you’re self-employed, consider using QuickBooks Self-Employed to effortlessly track income, mileage, expenses, and store receipts for the entire year.
Review Your W-4 Form:
– Take a moment to review your W-4 form and potentially make adjustments to your withholding. Withholding, the portion of tax deducted from your paycheck by your employer, has changed following tax reform. The updated form considers various factors like multiple income sources, spouse’s income, and tax credits for dependents to determine withholding. Update your W-4 form with your payroll department as needed, based on personal circumstances, to optimize your tax situation.
Make Charitable Donations:
– Increase your tax deductions by making charitable donations or contributing goods before the year ends. Ensure that your donations are to IRS-approved nonprofit 501(c)(3) charitable organizations. Track and value donations throughout the year using TurboTax Its Deductible for easy importation into your tax filing.
Contribute to Retirement Funds:
– Lower your taxable income by contributing to retirement funds like a 401(K) or Traditional IRA. Plan for your future by taking advantage of tax reductions on contributions, up to $23,000 for 401(K) and $7,000 for Traditional IRA in 2024. Self-employed individuals can contribute 25% of income or $69,000 to a SEP IRA.
Learn Something New:
– Consider furthering your education or skill set to qualify for the Lifetime Learning Credit if your income is moderate. This credit, worth up to $2,000 per tax return, supports educational expenses for eligible students enrolled in qualified institutions, regardless of degree pursuits.
Go Solar and Energy Efficient:
– Take advantage of increased tax credits for residential energy efficiency property like solar panels and electric vehicles under the Inflation Reduction Act. Solar energy credits have increased from 26% to 30% for eligible purchases made between January 1, 2022, and December 31, 2032.
In Conclusion:
As you navigate through the tax year, remember that taking small, proactive steps today can yield considerable benefits when you file your taxes in the future. By staying organized, reviewing your withholding, making charitable donations, contributing to retirement funds, learning new skills, and exploring energy-efficient options, you can optimize your tax situation and secure your biggest refund yet. TurboTax is here to assist you every step of the way, ensuring that you get the maximum refund you deserve. Stay informed, plan ahead, and watch your tax refund grow.
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