Another tax season is quickly approaching, and now is the best time to prepare. By figuring out your tax strategy now, you can potentially save money for your family — and save yourself from stress when deadlines loom closer.
Even if you want to begin tax preparation early this year, you may not know where to start or how to find a strategy that works for you. These methods will help you come up with a plan before April.
1. Know how you’ll file
Even before you start gathering documents and finding potential tax savings, it’s important to know how to file your taxes. If your income is simple and straightforward, you may opt to file for free online. However, many others choose to hire an experienced tax professional to file their taxes.
You may want to hire a tax professional* if:
- You have multiple streams of income
- You are an independent contractor
- You are not sure how your investments will be taxed
- You want to maximize potential savings
2. Maximize your potential refund
If you have ever received a tax refund, you know that it feels like a “bonus” from the government. In reality, though, you are simply getting money back because you have overpaid on your taxes at some point during the last calendar year.
If you file your own taxes, you could be missing out on potential credits and savings that lead to an annual refund. Taxation can be complicated, and licensed tax professionals are skilled in finding deductions that most of us miss. Whether you are filing on your own or working with a professional, ask about these potential deductions.
Child Tax Credit
If you’re a parent, you can receive a 2024 child tax credit of up to $2,000 per qualifying child. In order to qualify, each child must:
- Have a Social Security number
- Be under 17 at the end of the tax year
- Live with you for more than half of the tax year
- Provide less than half of their own financial support
- Be claimed as a dependent on your return
Child and Dependent Care Credit
If you pay a qualified individual to care for a dependent so that you (and your spouse, if filing jointly) can work, you could qualify for a care credit of up to $3,000 for one working person or $6,000 for two working people.
Education Tax Credit
If you or your dependents are paying for higher education, you could earn a significant tax credit to offset those expenses. The American Opportunity Credit and Lifetime Learning Credit can both assist in making education attainable for many individuals and families.
Charitable Contributions
If you’ve given money to a qualified charitable organization, your gifts may be tax deductible. The organization must have tax-exempt status for your contribution to qualify, and you must keep a record of your giving that supports the contributions entered on your tax return.
Other Common Deductions
There are many more common tax deductions available to individuals and families, including:
- Adoption Credit
- Medical Expense Deduction
- Student Loan Interest Deduction
- Energy-Efficient Home Improvement Deduction
- Healthcare Premium Tax Credit
Tax credits and deductions provide the potential to reduce your income tax payment. They are not guaranteed; filers must qualify by meeting certain conditions of each credit or deduction. Research on your own or ask your tax professional to find out if these credits or other deductions could save you money on your taxes this year.
3. Gather your documents.
Whether you’re filing one W-2 form or gathering up 1099s, it’s important to know where your tax documents are located and keep them organized as you prepare to file. Documents you may need include:
- W-2 forms from each employer
- 1099 forms for non-employee earnings
- 1099-INT forms for investment earnings
- Charitable contribution documentation
- State and local tax documents
- Documentation of expenses you plan to deduct
- Mortgage interest, if you own your home
By staying organized, you can avoid stress and simplify the tax filing process.
Financial Advice You Can Trust
Just as having a tax professional help you with your tax filing process, Marietta Wealth is committed to helping clients with their investment or savings plan. No matter how you decide to prepare and file your taxes this year, you could benefit from having a trusted financial advisor. While tax season brings your focus on paying the correct amount of tax for last year’s income, who is helping you focus on the right amount return for your years to come? At Marietta Wealth, we’re committed to helping our clients prepare for their future and take advantage of investment opportunities available to them. Find the financial freedom to pursue their dreams — and not just at tax season.
When you work with us, you’ll get comprehensive financial planning and investment management from a fee-only firm whose only goal is to help your finances thrive.
To learn more about how Marietta Wealth can help you meet your goals, get in touch today.
* Marietta Wealth is not a tax planning service, nor can it give tax filing advice. Certain of our representatives are Certified Public Accountants with the accounting firm Ben H. Crowe, C.P.A., LLC which is affiliated with Marietta Wealth Management. To the extent that these representatives provide accounting services, which may include tax advice, to any clients, including our advisory clients, all such services shall be performed by those representatives, in their individual professional capacities, independent of our advisory firm, for which services we shall not receive any portion of the fees charged by the representative, referral or otherwise. It is expected that these representatives, solely incidental to their practices as accountants, recommend our advisory services to certain of their clients. No client of Marietta Wealth Management is under any obligation to use the accounting services of these representatives. Our Chief Compliance Officer remains available to address any questions that a client or prospective client may have regarding this potential conflict of interest.
Marietta Wealth is a registered investment adviser. Registration of an investment adviser does not imply any level of skill or training. For additional information about Marietta Wealth’s financial planning and advisory services, please see the Marietta Wealth Disclosure Brochure or ADV Part 2A for full details, which is available upon request or by visiting our website.
This article is not intended to be used, and should not be used, as the sole basis for legal advice. The reader should seek and rely upon the guidance and advice of legal counsel before making decisions regarding any estate planning tools or documents.