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Tax Day is Tuesday, April 15, and there’s still time to reduce your 2024 income taxes.
Just because we’re well into 2025 doesn’t mean all opportunities for reducing 2024 income taxes have passed. Take a look at how contributions to retirement and health savings accounts (HSAs) and itemizing might reduce your tax bill. Also, if you’re not ready to file or pay by Tuesday April 15, see how to file an extension and apply for a payment plan.
Reducing taxable income
One way to potentially reduce 2024 taxable income is to set aside money for retirement in a traditional IRA. Folks under age 50 can contribute $7,000; those over 50 can contribute $8,000 for 2024 until April 25, 2025.
Small business owners and self-employed people with a Simplified Employee Pension (SEP) IRA can set aside even more for retirement; up to 20% of net income or $69,000, whichever is less. Contributions can be made up to the due date for your tax return.
Another way to reduce taxable income for 2024 is by making an HSA contribution. This option is only available if you have a high-deductible health plan. If your health insurance qualifies, you have until tax day to contribute for 2024. The maximum contribution for individuals with self-only coverage is $4,150; for those with family coverage the max is $8,300. Folks who are 55 or older can contribute an additional $1,000 to an HSA.
To itemize or not?
The standard deductions—$14,600 for single filers and $29,200 for married couples filing jointly—simplifies taxes for most people. However, if your qualifying expenses exceed these amounts, itemizing can lower your taxes.
Here’s an overview of what the IRS allows for itemized deductions:
- Medical and dental expenses that exceed 7.5% of Adjusted Gross Income (AGI)
- Certain taxes paid
- Home mortgage interest
- Gifts to charity
- Casualty and theft losses (only losses from federally declared disaster areas)
- Certain miscellaneous deductions.
If you itemize, be sure to keep documents like receipts, bills and cancelled checks to prove your expenses. For complete details on itemizing, check out About Schedule A (Form 1040) from the IRS.
Not ready for April 15?
Maybe you’re unable to file taxes due to being busy, disorganized or even ill. No matter what the reason is for needing more time to prepare 2024 taxes you can request an extension by filing Form 4868. You don’t even need to tell the IRS why you want an extension. And, there’s no fee for getting an extension.
If you opt for an extension, make sure to file Form 4868 by Tax Day and pay any taxes that are due. If you’re not sure how much is due, estimate the amount and pay by April 15. Not paying or underpaying taxes can result in penalties and interest.
What if you don’t have enough to pay 2024 taxes?
One of the worst experiences for taxpayers is when they face a tax bill and don’t have the money to pay it. If this happens, do not ignore the situation; delays will result in even greater penalties. Instead, apply for a payment plan. The IRS has plans available for individuals and businesses. Get IRS payment plan information here.
While this article contains general information, it’s wise to consult with a qualified tax return preparer to get individualized advice. The IRS offers this guidance on selecting a tax preparer.
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Consumers business loans
Do you have business banking questions? Contact our knowledgeable commercial loan officers.