Top 3 Money Moves to Prepare for Filing Your 2024 Taxes
As we head towards the April 15 filing deadline for your 2024 taxes, March is an important month to ensure that you have everything in order to file your return and to maximize your deductions and other benefits before filing. Here are the top three money moves for March in preparation for filing your return. 1. Double-Check Deductions & Credits Be sure to review your records to ensure that you have accounted for all deductions, credits and any other items that could reduce your tax liability. Deductions might include: Student loan interest Mortgage interest and property taxes Charitable contributions Business expenses including a home office deduction if you are eligible Expenses incurred for a rental property you own Deductions for employee and employer (if you are self-employed) contributions to a retirement plan Tax credits to review might include: The child tax credit Adoption tax credit (if you adopted a child in 2024) Education related tax credits Residential clean energy credit Electric vehicle tax credit 2. Maximize contributions to an IRA, an HSA or self-employed retirement plan April 15 is the deadline for contributions to an IRA account or an HSA (health savings account) for the 2024 tax year. The contribution limits for an IRA for 2024 are $7,000 with an additional $1,000 in catch-up contributions for those who are 50 or over. These limits are for contributions to all IRAs, both traditional and Roth. Only contributions to a traditional IRA made on a pre-tax basis offer a reduction in current year taxes. If you are covered by a workplace retirement plan such as a 401(k), then there may also be income limitations1 that determine if you are eligible to contribute on a pre-tax basis. Participation of a spouse in a workplace retirement plan may also impact your eligibility. An HSA must be in conjunction with an eligible high deductible health insurance plan. Annual contribution limits for 2024 are: Individual $4,150 Family $8,300 Additional contribution for those age 55 or over $1,000 Note if you were not enrolled in an eligible health plan for the full year these limits may be reduced. Additionally, once you are enrolled in Medicare, you are no longer eligible to fund an HSA. If you are self-employed, you can still fund a retirement plan for your business with 2024 contributions through April 15. A SEP-IRA can be opened and funded up to your tax filing date. The contribution limits for a SEP-IRA for 2024 are 25% of your compensation from the business up to a maximum of $69,000. If you have a solo 401(k), you can make a profit-sharing contribution of up to 25% of compensation up to a combined maximum of $69,000 or $76,500 for those 50 or over. Both the SEP-IRA or solo 401(k) profit sharing contributions must be made to a traditional account in order to provide a current year tax benefit. 3. Organize Your Tax Documents While this might sound basic and simplistic, it is critical that you have all tax documents ready and organized for your tax preparer or for yourself if you prepare your own return. These documents can vary with your unique situation, but some common examples include: W-2s from employment income and any 1099s from self-employment or consulting income. Investment statements and 1099s for investments A mortgage statement from your loan provider Documentation for a major life change like buying or selling a home, buying or selling a business or an inheritance received It is a good idea to take these documents and any others that will impact your income or expenses for the 2024 tax year and organize them. At the very least, organize them by income and expenses. If you are familiar with the sequence of your tax return you might even organize in that same sequence. Many tax professionals send out a tax return organizer to their clients at the beginning of tax season. Getting your documentation in order can make preparation by your accountant or by you easier. More importantly, it can help ensure that you do not omit any income that could result in an IRS penalty or any expenses or deductions that could result in you paying more in taxes that you need to. For more insights on tax planning for your investments and retirement accounts contact your Wedbush advisor. 1: https://www.irs.gov/retirement-plans/plan-participant-employee/2024-ira-contribution-and-deduction-limits-effect-of-modified-agi-on-deductible-contributions-if-you-are-covered-by-a-retirement-plan-at-work Disclosure Wedbush Securities does not provide tax or legal advice. Please consult your tax or legal advisor. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. The information in these materials may change at any time and without notice. Third-party entities, companies, and organizations that may be referenced on this page are not affiliated with Wedbush Securities or any of its affiliates. Opinions mentioned are that of the third-party and not of Wedbush Securities, the financial adviser and/registered representative, or any of our affiliates. Investment products involve investment risks including potential loss and are not insured by any federal agency, are not deposits or obligations of, or guaranteed by any financial institution and may involve loss of value. Past performance is not a guarantee of future returns. Any implementation of recommendations or investment strategies may generate fees, expenses, charges or commissions, based on the products and services. Any organization, company, individual, or third-party entity that are referenced on this page are not affiliated with Wedbush or any of its affiliates. The
How the Federal Reserve’s Next Move Could Impact Your Finances
At their most recent meeting in late January of this year, the Federal Reserve chose to leave interest rates at current levels. Their next meeting is scheduled for mid-March and their decisions in this meeting could have implications for your finances. Both investors and consumers are watching closely to see whether interest rates will change. The Fed’s decisions can significantly impact borrowing costs, savings, and investments. Impact of Potential Interest Rate Changes We clearly do not know what decisions the Fed will make at their March meeting about interest rates, but here are some possible impacts their decision could have on consumers and investors. No change in rates This would indicate that current borrowing conditions will stay in effect. Interest rates on car loans, mortgages and other major purchases will likely remain unchanged as well. For investors, they can expect to see interest rates on Treasuries and other bonds remain constant as well. Fed lowers rates If the Fed decides to lower interest rates, this could lead to lower interest rates on car loans, mortgages and other types of consumer and business loans. This could help spur the economy in that the cost of borrowing will decrease at least a small amount. Impact on Investments On the investment side, lower rates could lead to a decline in the yields on newly issued Treasuries and other bonds. CD rates would likely drop as well. Holders of existing fixed income securities could see an increase in the value of these holdings since the price of a bond tends to increase when rates decline. A drop in rates could serve as a stimulus for the stock market since a lower cost of borrowing could have a favorable impact on both consumers and businesses. On the consumer side, as mentioned above, the cost of borrowing for homes and other big-ticket items would drop. This could stimulate some consumers to move forward with purchases they may have been putting off. What This Means for You Whether the Fed makes a move at their upcoming meeting in March or in a future meeting, their decision on the direction of interest rates has a huge impact on the markets and the economy. If you are considering a home purchase, the future direction of interest rates is a very important consideration for you. Lower interest rates can result in lower mortgage rates which can improve the affordability of a home you are looking at. The flip side is that the seller is also aware of the Fed’s decision and may decide to list their home for a higher price under the assumption that lower interest rates make the home more affordable for buyers. If the Fed decides to lower interest rates at the upcoming meeting or in the future, this can be the impetus for you to refinance some of your debt. If you have a mortgage at a higher rate than you would like, a Fed move to lower interest rates can provide the opportunity to refinance this mortgage at a lower rate, lowering your payments. This can provide the choice of making lower payments or continuing to pay at a higher level to pay off your mortgage or other debt more quickly. Where the Fed decides to go on interest rates can impact investors as well. If they decide to lower rates at the upcoming meeting or at a future meeting, this is generally a positive for the markets. If they decide to hold off on cutting rates, this could be taken as a negative by the markets. An example of this occurred this past December when the Fed announced they were scaling back their plans to cut interest rates. The Fed had originally indicated that they would be looking at four rate cuts for 2025, but then announced that they were projecting no more than two cuts. The market’s initial reaction was very negative, and stocks fell. They have since recovered. We cannot predict what the Fed will do or precisely what impact their actions will have on the economy or the markets. There are often other factors beyond the direction of interest rates that come into play. Now is a great time to consult with your Wedbush advisor to ensure you are prepared for whatever the Fed decides on interest rates and whatever reaction the markets have to the decision. Disclosure Wedbush Securities does not provide tax or legal advice. Please consult your tax or legal advisor. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. The information in these materials may change at any time and without notice. Third-party entities, companies, and organizations that may be referenced on this page are not affiliated with Wedbush Securities or any of its affiliates. Opinions mentioned are that of the third-party and not of Wedbush Securities, the financial adviser and/registered representative, or any of our affiliates. Investment products involve investment risks including potential loss and are not insured by any federal agency, are not deposits or obligations of, or guaranteed by any financial institution and may involve loss of value. Past performance is not a guarantee of future returns. Any implementation of recommendations or investment strategies may generate fees, expenses, charges or commissions, based on the products and services. Any organization, company, individual, or third-party entity that are referenced on this page are not affiliated with Wedbush