Worried you missed your chance to reduce your income taxes for 2024? Fortunately, you still have a variety of ways to knock down your tax bill before you file your taxes for last year. Here are four strategies to consider:
- Traditional or Roth IRA. You can fund up to $7,000, or $8,000 if over 50, to a traditional IRA until 4/15/25. Traditional IRA contributions are tax deductible, subject to IRS limitations, while Roth IRA contributions grow tax-free. If your income was too high to contribute to a Roth IRA, consider a Backdoor Roth IRA.
- Health Savings Account (HSA). If you have a qualifying health insurance plan, you can make tax-deductible contributions up to $4,150 as an individual or $8,300 as a family to an HSA. For more, learn 3 Ways to Maximize your HSA.
- SEP IRA or Solo 401(k). If you own a small business, you can make tax deductible contributions up to $69,000 to a SEP IRA or Solo 401(k).
- Cash Balance Plan. If you’re maxing out your IRA and 401(k), a Cash Balance Plan can provide much higher tax deductions. In some cases, we’ve seen nearly $500,000 in tax-deductible contributions available to a cash balances plan. See our Cash Balance Plan article for more, including real world examples. These plans can generally be set up and funded up to your tax filing deadline, including extensions.
As with any tax strategy, you’ll be best served by your tax and financial professionals working together to help evaluate and recommend the best mix of strategies for your situation. Wondering where to start? A conversation with our team is a great first step to see if we’re a fit!
Josh Whelan
CFP®, CLU®, ChFC®
Partner, Financial Advisor
About the Author
Josh sees his profession as a calling, not just a career. His motive for pursing financial planning was very personal. While working on a degree in marriage and family counseling, Josh’s father was diagnosed with multiple sclerosis. Josh decided then and there to change career paths to help his family prepare for an uncertain financial future. Financial planning became his path to serving others.
The “Alterra” name was coined by joining the Latin roots “alter”, the origin of the word “altruism” with “terra” meaning earth or land. This name reflects the company philosophy of “clients before profits” and providing firmly grounded advice.