Strategies to Reduce Your 2024 Tax Bill or Enhance Your Refund

Many taxpayers are keen to find tactics to lower their tax liabilities for 2024 or increase their potential refunds. While options are limited, particularly for salaried employees, financial experts highlight several approaches.

Catherine Valega, a certified financial planner and enrolled agent in the Boston area and founder of Green Bee Advisory, notes that very few tax-saving actions can be completed after December 31.

Once the year concludes, missed opportunities include claiming tax advantages through direct actions like deductions or credits.

However, before the tax deadline on April 15, there remain a few practical moves you can make. Here are three considerations.

1. Add Funds to Your Health Savings Account

If you haven’t reached the contribution limit for your Health Savings Account in 2024, you still have time until April 15 to add funds and benefit from tax deductions.

In 2024, individuals can contribute up to $4,150 for single coverage and $8,300 for family coverage, but you need a qualifying high-deductible health plan to make these contributions.

"An HSA offers straightforward benefits," says Thomas Scanlon, a CFP at Raymond James in Manchester, Connecticut. "For those who qualify, it's wise to contribute and gain a deduction."

2. Consider a Pre-Tax IRA Contribution

The cutoff for contributing to an IRA for the 2024 tax year is also April 15. You can deposit up to $7,000, and those aged 50 or older can add an additional $1,000.

Your eligibility for pre-tax IRA contributions depends on your income and participation in workplace retirement plans.

According to Andrew Herzog, Wealth Manager at The Watchman Group in Plano, Texas, this approach lowers your adjusted gross income for 2024, but withdrawals are subject to income tax. "A traditional IRA essentially defers your tax obligation," Herzog explains.

3. Utilize a Spousal IRA

Couples filing jointly have another option: the spousal IRA, which can be either a Roth or traditional account.

For couples where one spouse does not work, a spousal IRA allows contributions equivalent to a salaried spouse's earnings, enabling a possible deduction for both.

Regardless of whether you're contributing individually or for both spouses, it's crucial to assess your broader financial and tax objectives, suggest experts.