Truckers, we´ll give you some tax-saving tips to keep in mind for next year. Your next tax return may not be everything you think it is, especially if you think you´ll end up with a huge debt. In fact, there may be things you can do to improve your tax situation.
It´s always a good idea to take the time to come up with some strategies before the year ends. Check these six key elements and you´ll be better prepared to handle tax filing season. Our last-minute tax savings strategies could save you money. Keep in mind that you can use these tips at any time of the year, so you don´t have to consider them only at the end of the year.
1. Know your marital status for the purposes of your tax return
There are several ways to file your taxes. Depending on your marital status and dependent status.
2. Review retirement contributions and distributions
Pay attention to your annual contribution limits for employer-sponsored retirement accounts, such as 401(k) and 403(b). For most employees, the limit is $22,500 for 2023 ($23,000 for 2024).
3. Decide: Itemized or standard deduction?
It is beneficial to add up your possible itemized deductions before the end of the year to plan whether you could itemize or take the standard deduction. If your itemized deductions exceed the standard deduction for your tax status, you must itemize the expenses on your tax return.
4. Claim medical expenses in one year
You may want to group the current year´s medical expenses before December 31 if you plan to itemize them. Itemized expenses are only deductible to the extent they exceed 7.5% of your adjusted gross income (AGI) for medical and dental expenses.
5. Consider the classification of your taxes for next year
Before grouping expenses, taxpayers should consider their overall tax classification for this tax year and the next.
For example, if I know my income will increase next year and I will therefore be in a higher tax bracket, it may make sense to wait until next year to take the deduction because it will be worth more to you as a percentage of your income.
6. Beware of the alternative minimum tax
The common advice of moving expenses, such as prepaying state or property taxes, from January to December to get the tax deduction a year earlier can backfire if you end up subject to the alternative minimum tax (AMT). But what is this tax?
Under IRS tax law, certain tax benefits can significantly reduce a taxpayer´s regular tax amount. The alternative minimum tax (AMT) applies to taxpayers with high incomes by establishing a limit on those benefits. It helps ensure that those taxpayers pay at least a minimum amount of taxes.
We hope that with this article we have clarified some doubts you may have. The Jagg Tax Solution Inc. team wishes you a Merry Christmas and a prosperous new year 2024.
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