Spring is almost here, which also means tax season! Here are eight things to know before you file those taxes.
#1: Income tax brackets shifted a bit
The first is that income tax brackets shifted a bit, which means more money is being taxed in the lower tax brackets, which means some potential tax savings for you.
#2: The standard deduction increased slightly
In addition, if you’re taking the standard deduction, the standard deduction amount increased in 2023, which means less money is being taxed.
#3: Itemized deductions remain pretty much the same
On the other hand, if you are taking the itemized deductions, there haven’t been a lot of changes, but make sure that you’re maxing out the deductions for state and local taxes, mortgage interest deduction, medical expenses, and charitable donations, as well as anything else.
#4: IRA and 401(k) limits increased
In 2023, the IRA contribution limits are maxed at $6,500 and $7,500. If you’re over age 50, you still have time to maximize those contributions. So, make sure to max those contributions out if that was part of your financial plan. Also for 2024, the limits increased to $7,000 for IRA and Roth IRA contributions. Make sure to adjust your contributions if needed.
Finally, take a look at your 401(k) limits, as those contribution limits also increased in 2023 and 2024.
#: 5: HSA contribution limits increased
While we are talking about contribution limits, the HSA contribution limit also went up in 2023. There is still time for you to max out that contribution, right up until the time that you file your taxes. So, make sure to get those savings from contributing to your HSA.
#6: The Child Tax Credit, Alternative Minimum Tax Exemption, and the Estate Tax Exemption Increased
Technically, these are numbers six, seven, and eight, but a few other items that may or may not impact you are the Child Tax Credit, the Alternative Minimum Tax Exemption, and the Estate Tax Exemption, which all increased in 2023. Again, these may not apply to everyone, but we wanted to make sure you were aware of them in case those apply to you!
And just for One Life Financial Group clients, your tax form should be available on the Schwab client site under documents, and feel free to reach out if you need help finding them.
If you’re wondering how these tax changes might affect your situation, talk to your financial adviser or schedule a consultation with us.
Getting started is easy with just three simple steps:
- Schedule your complimentary initial consultation
- Let us customize a plan designed to help you maximize your wealth, minimize your lifetime tax bill, and protect your time and money so that you have more time for what matters to you.
- We’ll help you stay on track so you can enjoy the wealth you’ve created, both now and in the future.
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Advisory services are offered through One Life Financial Group, Inc., an Investment Advisor in the State of Minnesota. All content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions.
One Life Financial Group provides a comprehensive tax minimization process and uses sophisticated software to help you uncover opportunities to help minimize your tax bill. However, One Life does not process tax returns. Discuss all tax planning opportunities with your accountant before implementing tax planning strategies.