HOW TO COMPARE CREDIT BUILDER APPS IN 2024

Saving money on taxes can be easier than you think, as long as you're informed and proactive about your tax situation. Here are five effective strategies to help you reduce your tax liability and keep more money in your pocket:

1. Maximize Retirement Contributions

One of the easiest ways to reduce your taxable income is by contributing to retirement accounts like a 401(k) or an IRA. Contributions to these accounts are tax-deferred, meaning you won’t pay taxes on that money until you withdraw it in retirement.

 For 2024, individuals under 50 can contribute up to $22,500 to their 401(k) and $7,000 to an IRA. These contributions directly lower your taxable income and could push you into a lower tax bracket.

2. Take Advantage of Tax Credits

Tax credits offer a dollar-for-dollar reduction of your tax bill, making them even more valuable than deductions. 

Some common tax credits available to U.S. taxpayers include the Earned Income Tax Credit (EITC), Child Tax Credit, and the American Opportunity Tax Credit (for education expenses). Ensure you explore all available credits and see which ones apply to your situation.

3. Deduct Charitable Donations

If you itemize your deductions, charitable contributions can help reduce your tax liability. Donations of cash, clothing, or even volunteer time to qualified organizations are deductible. Be sure to keep receipts or documentation for any donations, as the IRS may require proof.

4.Leverage Health Savings Accounts (HSAs)

If you have a high-deductible health plan, contributing to a Health Savings Account (HSA) is a tax-efficient way to pay for medical expenses. Contributions to an HSA are tax-deductible, and the withdrawals are tax-free as long as they’re used for qualified medical expenses. 

In 2024, individuals can contribute up to $3,850 for self-coverage and $7,750 for family coverage. Plus, any unused funds roll over to the next year.

5. Review Your Filing Status

Your filing status can significantly impact your tax bill. If you're married, consider whether filing jointly or separately would result in a lower overall tax liability. 

Single taxpayers with dependents may qualify for the more favorable Head of Household status. Review your status each year and ensure it aligns with your current life situation.

Final Thoughts

Tax season can be overwhelming, but by staying organized and taking advantage of available deductions and credits, you can save a significant amount of money. It's important to start planning early and keep detailed records throughout the year. 

For more personalized advice, consider consulting a tax professional or using online tools, like those offered by Resoly, to ensure you're not missing out on any savings opportunities.

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