Now that 2024 is coming to an end, you have just a few weeks to make several money moves that can help lower your taxes for the year.
Round up deductible expenses. In 2024, the standard deduction is $14,600 for singles or $29,200 for married couples who file jointly. That means the majority of taxpayers will claim the standard deduction on their 2024 tax return. But if you’re within shouting range of itemizing, you can lower your tax bill by bunching deductible expenses before year-end. A common way to increase deductions is donating to charity, so if you contribute the same amount every year, consider doubling your donations this year and skipping next year.
If your municipality allows you to pay your tax bill early and you haven’t already paid $10,000 in state and local taxes—the maximum you can deduct in 2024—pay your tax bill due in January in December so you can deduct it from your 2024 taxes.
Finally, if you had major surgery or a chronic medical condition in 2024, you may be eligible to deduct a portion of your out-of-pocket expenses. This deduction is limited to unreimbursed medical expenses that exceed 7.5 percent of your adjusted gross income, so it’s critical to keep track of all eligible expenses that insurance didn’t cover. Consider scheduling discretionary medical or dental procedures and appointments before year-end to increase your deductible expenses.
- If you’re an educator who has subsidized the cost of art supplies, whiteboards or other qualifying items for your classroom, you can deduct up to $300 of your out-of-pocket costs. You may also be eligible to claim the deduction for professional development courses if the cost wasn’t covered by your school or another source. If you’re married and your spouse is also an educator, you can deduct up to $600 of eligible classroom expenses as long as you file a joint return.
- The American Opportunity tax credit is worth up to $2,500 in 2024 to offset the cost of tuition and other eligible expenses incurred by students who are in their first four years of undergraduate study. If you haven’t already maxed out on eligible expenses, prepaying tuition due in January will lower your tax bill. A credit is more valuable than a deduction because it represents a dollar-for-dollar reduction in your tax bill. Joint filers qualify for the full credit if their modified adjusted gross income (MAGI) is $160,000 or less. Single filers get the full amount with MAGI of $80,000 or less. The credit is gradually reduced to zero for married couples with MAGI between $160,000 and $180,000 and for single taxpayers with MAGI between $80,000 and $90,000.
- If you or someone in your household is in graduate school, you may be eligible for the Lifetime Learning tax credit. With this credit, you can claim 20 percent of the first $10,000 of out-of-pocket costs for college tuition, fees, and books, for a total maximum credit of $2,000. Unlike the American Opportunity credit, the Lifetime Learning credit is not limited to undergraduate educational expenses.
