While the upcoming holidays are understandably at the forefront of many peoples’ minds, the end of the year marks an opportunity to start preparing for your 2023 annual taxes (due on April 18, 2024) and your tax strategies in the year ahead. Tax preparation and planning are essential at any time of the year, but this is especially true as 2023 comes to a close. In addition, changes to tax laws and guidelines are being introduced for the months to come.
The best way to enlist tax planning strategies all year long is to partner with a financial expert who understands the importance of tax planning all year long. In the meantime, to maximize the money, you save on taxes this year – and minimize the stress and work in the weeks ahead – here are some tax planning strategies you can enlist now, before the New Year.
Assess Your Current Tax Situation
The end of the year is an excellent time to take stock of your estimated taxes for 2023, so conduct a self-assessment of your current tax situation.
What was your income for the year from your job and various other sources, like freelance work or investments? What were your expenses, and are there any other deductible expenses you can make now to minimize your taxes come April 18? A partner like Saddock Advisory can help you review these details and pave the way for creating innovative tax preparation strategies both before and after the start of 2024.
Consider Possible Deductions and Credits
Some deductions and credits completely depend on your unique tax situation, which can be maximized in the final weeks of 2023. Additionally, they can have an impact on your annual tax return.
As the year ends, it’s a good time to review your charitable donations, financial gifts, work-related expenses, home repairs, and educational tools to see if you’re eligible for tax deductions and credits. Again, your best resource to explore your options is a tax advisor at Saddock Advisory, which can provide detailed insight into your unique financial situation and imminent opportunities.
Review the Tax Law Changes for 2024
2024 will usher in a wave of new changes in federal tax guidelines, and understanding some of these alterations will go a long way in preparing both 2023 and next year’s tax returns.
For example, in 2024, there will be another increase in federal tax brackets due to national inflation, which has the potential to impact the amount of taxes you pay throughout the year.
For 2024 federal taxes, the tax brackets will be increased to the following:
- 37% for individuals over $609,350 (or $731,200 for couples filing jointly).
- 35% for individuals over $243,725 (or $487,450 for couples filing jointly)
- 32% for individuals over $191,950 (or $383,900 for couples filing jointly)
- 24% for individuals over $100,525 (or $201,050 for couples filing jointly)
- 22% for individuals over $47,150 (or $94,300 for couples filing jointly)
- 12% for individuals over $11,600 or ($23,200 for couples filing jointly)
As a result of these increases, starting January 1, 2024, individuals may find that they fall in a lower tax bracket than in 2023, which may be reflected on their regular paycheck.
In addition, the tax bracket increases present an opportunity for individuals on the border of two brackets to minimize their taxes in 2023.
For example, if you had $45,000 in income in 2023, you are currently in the 22% tax bracket, which applies to individuals between $44,725 and $95,374. In 2024, with $45,000 in annual income, you will move into the lower, 12% tax bracket.
If you were planning to pay around $500 or $1,000 in work expenses that can be deducted from your taxes, or if you want to make charitable donations or any other contributions that will lower your total income, it might be a good idea to make these payments by the end of 2023, instead of early 2024. This will help you reduce your income under the $44,725 threshold. Remember, this is just one example of the changes to come. A tax expert can guide the way regarding other changes that may impact your bottom line.
Consult with Our Expert Tax Professionals at Saddock Advisory
The best way to prepare for the end of 2023 and the fresh start of 2024 is to start a conversation with our experts at Saddock Advisory. With client-focused services and a constant eye on the changes ahead, Saddock Advisory is your best resource for implementing the most beneficial tax planning strategies now and for many months and years to come.