Optimize Your Money and Your Tax Return in 2024

We all know that the acronym KISS means Keep it Simple, Stupid.

But when it comes to taxes, we stress, worry, and fret ourselves into a state of such hysteria that we choose procrastination over action.

With time on our side, 2024 is going to be the year of organization, action, and yes, simplicity for you and your taxes.

Have a process. The good news? It is still January. This means that there is time to carefully gather all the documents that you need to give to your CPA. Documents include:

• Social Security documents
• Income statements such as W-2s and MISC-1099s
• Tax forms that report other types of income, such as Schedule K-1 for trusts, partnerships, and S corporations
• Tax deduction records
• Expense receipts

What am I missing? Beyond the items listed above, think about itemized deductions and write-off documentation. You need to detail itemized deductions like charitable donations, medical expenses, and gambling losses (up to winnings) for tax benefits.

Deductions. This can feel a bit overwhelming, so let’s review some ideas to consider:

• Look at SALT limitations with state income tax reductions.
• Are there possible bunching strategies to consider?
• What about charities? Can we use low-basis stocks instead of cash?
• Are there some portfolio tax efficiency strategies to consider?

Turn Back the Clock: Though the calendar may say 2024, there are still some moves you can make for the 2023 tax year:

• Contribute to tax-advantaged accounts such as individual retirement accounts (IRAs) and health savings accounts (HSAs).
• Waiting until the beginning of the next year (for example, early 2024 for the 2023 tax year) can be a great strategy to make sure certain account contributions are maximized but proceed with caution. Make sure it is clear which tax year the contributions are for.

Be Proactive: Remember, tax planning should not just be about the next 12 months. Shift your focus to the future and remind yourself that tax reductions from the Tax Cuts and Jobs Act will expire at the end of 2025, which means that without any new legislation, tax rates will go up in 2026. This provides an additional incentive to “pay the devil you know” by doing Roth conversions and/or gains harvesting at today’s rates versus waiting until rates go up in a few years.

It takes a village. The best tax planning requires coordination between us and your CPA. Together, we can look at your tax return and examine what can be done, both this year and beyond.

Now is the time for action, not procrastination. At the very least, write a short checklist and begin collecting all your tax documents in one place. Your future self will thank you.

Remember: You aren’t in this alone. We’re here to provide guidance on how to keep tax season simple. If any of the ideas in the Deductions section sparked your interest, simply click reply to this email.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor. LPL Financial does not offer tax advice.