Smart Year-End Tax Moves to Reduce Your 2024 Tax Bill

As the holiday season approaches, taxes may not be top of mind. Yet, this time of year offers valuable opportunities to implement tax strategies that could reduce your 2024 tax bill — and potentially provide benefits in future years. Here are three tax-savvy moves that could help you save on your 2024 taxes.

1. Donate Appreciated Stocks to Charities

If you itemize deductions and plan to give to IRS-approved public charities, donating appreciated stocks can boost both your tax and charitable impact. Here are a couple of strategies to maximize your savings:

• Sell Underperforming Stocks: Selling stocks at a loss can offset gains elsewhere, creating a capital loss that may reduce your taxable income. The proceeds can then be donated to charity, providing a charitable deduction in addition to the tax benefit of the capital loss.
• Donate Appreciated Stocks: Stocks held for over a year can be donated at their market value, which means you avoid capital gains tax while claiming a charitable deduction for the full value of the stock. Stocks held for less than a year can also be donated, but the deduction is limited to the stock's cost basis.

2. Prepay Higher Education Expenses

If you, your spouse, or a dependent are attending a qualifying postsecondary institution, prepaying tuition for early 2025 could secure valuable education credits for 2024:

• American Opportunity Credit: This credit provides up to $2,500 per eligible student, covering 100% of the first $2,000 in education expenses, plus 25% of the next $2,000.
• Lifetime Learning Credit: Families can receive up to $2,000 for 20% of up to $10,000 in qualifying expenses.

In 2024, both credits are gradually phased out if your modified adjusted gross income (MAGI) is between:

• $80,000 and $90,000 for unmarried filers, or
• $160,000 and $180,000 for joint filers.

To qualify for the maximum credit, consider paying tuition for early 2025 now if you’re eligible. This strategy may also help reduce your MAGI for 2024, allowing you to maximize education credits.

3. Consider a Roth IRA Conversion

If you anticipate being in a higher tax bracket in retirement than you are now, a Roth IRA conversion could help manage future tax liability. While converting a traditional IRA to a Roth triggers a current tax bill, it also provides a long-term tax hedge by securing future tax-free withdrawals.

After conversion, all future gains and qualified withdrawals from the Roth account are tax-free, provided:

• The Roth has been open for over five years, and
• You’re at least 59½, disabled, or deceased at the time of withdrawal.

This strategy locks in today’s tax rate, which can be advantageous if you expect tax rates to increase in the coming years.

Consult Your HoganTaylor Advisor

With the upcoming election year and many provisions from the Tax Cuts and Jobs Act set to expire at the end of 2025, federal tax laws may shift in the next few years. Consult with a HoganTaylor advisor today to discuss these and other strategies to minimize your 2024 tax bill.

HoganTaylor Wealth

HoganTaylor Wealth provides an integrated approach to investment and financial planning and is a registered investment advisor and subsidiary of HoganTaylor LLP. HoganTaylor Wealth takes pride in serving clients as an independent fiduciary through holistic financial planning. Learn more at hogantaylor.com/wealth.

INFORMATIONAL PURPOSE ONLY. This content is for informational purposes only. This content does not constitute professional advice and should not be relied upon by you or any third party, including to operate or promote your business, secure financing or capital in any form, obtain any regulatory or governmental approvals, or otherwise be used in connection with procuring services or other benefits from any entity. Before making any decision or taking any action, you should consult with professional advisors.