5 Steps In January to Optimize Your Tax Savings

To optimize your tax savings in January, the first thin you should do is schedule an appointment with your business & tax strategy coach, Click Here. If you start planning in January you'll pay less in taxes, you'll save more money. and have more time to do the things you actually enjoy doing! Consider the following five your January Action Items.

1. Contribute to Retirement Accounts: Maximize your contributions to tax-advantaged retirement accounts, such as traditional IRAs and 401(k)s. Contributions to these accounts can reduce your taxable income for the previous year if made by the tax filing deadline. For 2024, the contribution limit for IRAs is $7,000, or $8,000 if you're 50 or older. I have one word for you and I hope you understand - ROTH.

2. Fund a Health Savings Account (HSA): The wealthy's secret weapon... If you have a high-deductible health plan, contributing to an HSA can provide triple tax benefits:

   1. contributions are tax-deductible,

   2. growth is tax-free, and

   3. withdrawals for qualified medical expenses are tax-free.
      
      For 2024, the contribution limit is $4,150 for individuals and $8,300 for families, with an additional $1,000 catch-up contribution allowed for those 55 and older.

3. Organize Tax Records: This is where a good bookkeeper is worth their weight in gold. Gather all necessary tax documents, such as Profit & Loss statements, Balance Sheets, W-2s, 1099s, and the receipts for all your deductible expenses. Organized records help ensure you don't miss out on deductions and will expedite the filing process. If your time is valuable, you need a bookkeeper.

4. Adjust Tax Withholdings: Speak to your payroll team, review your W-4 form, and adjust your tax withholdings if necessary. Ensuring the correct amount is withheld can help you avoid owing taxes next year or giving too much to the IRS to hold for you... You deserve better control over your finances throughout the year.

5. Plan for Estimated Tax Payments: Sole proprietors, Independent Contractors, Gig Workers or 1099 "employees" listen up... Ifyou owe taxes each year because you don't pay quarterly taxes, you are just donating extra taxes each year. If you have income not subject to withholding, such as self-employment or investment income, ensure you've made the necessary estimated tax payments to avoid penalties. The final estimated tax payment for the previous year is typically due in January.