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4 Last Minute Tax Saving Strategies

March 19, 2024

Wondering how you can reduce your tax bill? There is still time to implement saving strategies, even after year end. Here are four things to consider as April 15 approaches, along with some timely information about this filing season.

Is it too late to trim down your tax bill for this year? No! There are several money saving tactics that you can implement post December 31. Here are some key considerations.

  1. Contribute to a traditional IRA- Check out our blog, What is the Deadline to Contribute to my IRA this Year? You can contribute up to $6,500 to a traditional or Roth IRA for tax year 2023. If you’re 50 or older you can put in an extra $1,000. Keep in mind that limits may apply based on type or amount of income. You must contribute by April 15, 2024.
  2. Contribute to an HSA- Were you covered by approved high-deductible healthcare plans for 2023? You have until April 15, 2024 to make contributions to health savings accounts (HSAs) for 2023. For single taxpayers, the coverage is up to $3,850 (plus $1,000 for those age 55 or older). Family coverage is up to $7,750 (plus $1,000 for HSA owners age 55 or older).
  3. Contribute to a SEP IRA- If you have self-employment income, you can make a tax-deductible contribution to a Simplified Employee Pension (SEP) of up to $66,000. Taxpayers who have a six-month extension to file have until October 15, 2024 to set up these plans and contribute to them for 2023.
  4. File on time to avoid unnecessary late filing penalties. If you owe and cannot pay the amount owed, filing an accurate Request for Extension of Time to file will help avoid federal late filing penalties. Note that you will still owe late payment interest and penalties until the tax is paid in full.

What you should know this filing season

  • Direct File Program- Residents in 12 states are eligible to e-file their returns through the IRS Direct File pilot program starting in mid-March. Eligible taxpayers must have income limited to wages reported on Form W-2, Social Security or unemployment and $1,500 or less in interest income. Participating states are Arizona, California, Florida, Massachusetts, New Hampshire, New York, Nevada, South Dakota Tennessee, Texas, Washington and Wyoming
  • Child tax credit expansion- The House passed a bill that aims to temporarily broaden the child tax credit, which could offer assistance to lower-income families having multiple children. Regardless of potential changes, taxpayers should not delay their filing.
  • Energy efficient home improvements- Effective on January 1, 2023, the energy efficient home improvement credit is increasing with an annual credit up to $1,200. Check out our blog, Home Improvements & Your Taxes: What You Should Know
  • Electric vehicle tax credits- Did you buy a car in 2023? You may qualify for electric vehicle tax credits. You may qualify for a tax credit on your 1040 when you buy an EV. The credit can be up to $7,500 but is subject to a phase-out based on the number of vehicles sold by the manufacturer. There are also tax credits available for a portion of qualifying energy home improvements.
  • 1099-K reporting threshold delayed- Do you receive payments from PayPal, Venmo, eBay, etc? Starting in 2022, the threshold was set to decrease to $600, meaning if you received more than $600 per year (no minimum transaction requirement) through third party peer-to-peer payment apps, you would have received the Form 1099-K. In December 2022, the IRS stated that 2022 would be a “transition year” for this new requirement. As of November 21, 2023, 2023 will be treated as another transition year for the requirement.

    To give taxpayers more time to get used to the change, the IRS is planning a phase-in threshold for tax year 2024 of $5,000. They are still working to clarify the other elements of the reporting requirements including how best to focus on taxable transactions.

Don’t forget to download our 2024 Tax Deadline Calendars for Businesses and Individuals for helpful information on upcoming deadlines.

Questions? Contact us.

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