The April 15th Tax Day for 2024 may be months away, but it’s never too early to start employing smart strategies that will help minimize your taxes throughout the year. This can help you ensure no unpleasant surprises when it’s time to file.
Tax preparation and planning that occurs all year long results in the biggest benefits possible to individual taxpayers. Therefore, taking steps now to save money over the long-term is a great initiative for seasoned investors and everyday taxpayers alike.
A partner specializing in personal tax planning is your best resource for round-the-clock monitoring that identifies opportunities to minimize taxes by year’s end.
In the meantime, however, here are just a few things you can do in the weeks and months ahead to save money before the next April deadline inevitably arrives.
Establish an Easy Way to Track your Expenses
It’s easy for those little business or work expenses, like a parking receipt or business lunch, to get lost in a crowd of everyday costs. But these small amounts spent on the job can add up when tallied together.
If you plan to itemize deductions, then make sure you have an easy tracking system to enter all of the small expenses that you spend on a regular basis. This can be as simple as an Excel spreadsheet or an old-fashioned notebook. You just need an easy way to jot down these expenses as they occur throughout the year.
Defer Income if it’s Going to be a High-tax Year
By the first few months of 2023, you’ll likely have a good idea if you’re going to have a year with a higher-than-average or lower-than-average income. If you expect it to be a high-income year, then it’s smart to defer some of your taxable income to other opportunities, like retirement accounts.
You can check with your employer to see if there is a nonqualified deferred compensation plan or simply plan to move more taxable income into your retirement accounts or other investments. High income years may also be a good time to make more charitable contributions to maximize your deductions at year’s end.
Accelerate Income if it’s Going to be a Low-tax Year
Conversely, you can accelerate your income if you expect to make less in 2023 than in previous years. Additionally, there are multiple ways to achieve this goal, which will be helpful years into the future. If you plan on selling a business, real estate, or investments at some point, now may be the ideal time. However, this all depends on market conditions across the board.
Your team of financial professionals and tax planning resources will be able to help you determine the best timing for these types of large transactions. Therefore, it’s worth bearing in mind that a low-income year is a good time to accelerate your financial goals.
Another strategy that can help maximize your itemized deductions is bunching. Bunching refers to including several expenses in a single year. Therefore, it increases the chance of going above the standard deduction amount, allowing you the opportunity to itemize your 2023 deductions.
For example, you can contribute higher amounts to charity or bump up your medical expenses, business expenses, and 529 plan contributions to create a more considerable year-end dedication. Again, financial professionals (Dallas, TX-based or anywhere in the country) are your best resource when it comes to determining if bunching – or any year-round tax strategy – works best for your unique financial situation.
Identify the Tax Planning Resources that Can Pave the Way for a Year-round Strategy
You may have an idea of how much money you will have acquired by the time 2024 rolls around. However, even if you have a full accounting of income and expenses, the year-round money saving strategies that align with your tax situation may not always be clear.
This is why when launching any tax preparation and planning endeavor, you need an expert at your side. An experienced financial advisor can pave the way and identify strategies that will maximize your benefits but require the least amount of time and effort.
Tax Planning with Saddock Advisory
A smart strategy starts with a consultation with Saddock Advisory. With our tax planning resources guiding the way, we can help you adopt the best practices and plans that will ensure a better financial future when it comes to taxes and miles beyond.
It’s never too early to start thinking about 2024. Let’s work together to ensure that 2023 is your most profitable and successful year yet.