Ready to Tackle Your 2024 Taxes and Plan for 2025? Here’s How to Get Ahead
As the year winds down, the calendar serves as a reminder: it’s time to get serious about taxes. Sure, it’s not the most exciting part of ringing in the new year, but with a little preparation, you can set yourself up for financial success—not just for this tax season, but for years to come. Let’s dive into what you can do now to close out 2024 smoothly and prepare for a stress-free 2025.
Reflecting on 2024: Closing Out the Year Right
The end of the year always feels like a whirlwind. Between holidays, work deadlines, and family gatherings, it’s easy to put off tax prep. But trust me, a little effort now will save you big headaches come filing season.
Start by gathering all your records. Did you receive W-2s from employers or 1099s from freelance gigs or investment accounts? Don’t forget about those less obvious sources, like gig work (hello, Form 1099-K) or even cryptocurrency transactions. And if you had Marketplace health insurance, grab that Form 1095-A to reconcile your Premium Tax Credit.
Speaking of reconciliation, this is the perfect time to review your financial year. Did you maximize contributions to your retirement accounts? If not, there’s still time! Adding to an IRA or 401(k) by year-end not only strengthens your future but also reduces taxable income. And don’t overlook the charitable donations you made this year—those can add up.
Here’s another pro tip: take a closer look at your investments. If you have underperforming assets, selling them now could help you offset capital gains. It’s called tax-loss harvesting, and it’s a savvy move for those with a diverse portfolio.
Finally, double-check your banking information. If you’ve switched accounts or closed one recently, update your direct deposit details with the IRS. A delay in your refund because of outdated info is no way to start the new year.
What’s Changing for 2024 Filings?
Every tax year brings its own updates, and 2024 is no exception. If you’re contributing to retirement accounts, the limits have increased: IRAs now allow up to $7,000 ($8,000 if you’re 50 or older), and 401(k)s max out at $23,000, with catch-up contributions for those 50+ raising the total to $30,500.
Gift-givers, take note: the annual gift tax exclusion has climbed to $18,000. Whether you’re helping a loved one buy a car or funding their education, this higher threshold could mean significant savings.
And for those considering an electric vehicle, the Clean Vehicle Credit remains a strong incentive, with up to $7,500 available for qualifying purchases. Just be sure your income falls within the limits: $300,000 for married couples filing jointly, $225,000 for heads of household, and $150,000 for single filers.
Perhaps the most intriguing updates are the new exceptions to early withdrawal penalties from retirement accounts. If you’ve faced unexpected challenges, such as being a victim of domestic abuse or dealing with a federally declared disaster, you may qualify for penalty-free withdrawals under expanded rules from the SECURE 2.0 Act.
Looking Ahead to 2025: Why Preparation Matters
Tax planning isn’t just about surviving this season; it’s about thriving in the next. As we turn the page to 2025, now is the time to put systems in place that will make your financial life easier.
Start by revisiting your withholding. Did you owe taxes or get a big refund this year? Both scenarios suggest your W-4 needs adjusting. Fine-tuning your withholdings now could mean keeping more of your paycheck in 2025 or avoiding a surprise bill next April.
Next, think about recordkeeping. Tracking expenses like mileage, business meals, and charitable contributions throughout the year is a game-changer. Consider apps or spreadsheets to make it a habit—you’ll thank yourself when it’s time to file.
And don’t forget about major life changes. Whether you’re planning a big move, expecting a new addition to the family, or thinking about retirement, these events can have significant tax implications. Planning ahead with a professional can save you money and stress.
One more thing: automation is your friend. If you have recurring contributions to a 401(k) or IRA, make sure they’re optimized to hit those 2025 limits. Set it and forget it, and watch your savings grow.
Why Start Now?
It’s easy to procrastinate, but the sooner you get started, the more opportunities you have to save—and the fewer surprises you’ll face. At ABCRON Enterprises LLC, I specialize in helping clients close out their tax year with confidence and plan proactively for the future. A reasonably priced consultation session could be the best investment you make for your business and personal finances. You’ll be glad you did.
So why wait? Let’s tackle your taxes together and make 2025 your most financially savvy year yet. Reach out today to book your consultation and start the new year with confidence!