This could be your biggest source of tax savings in 2024

Paying taxes is something almost everyone has to do. And you don’t have to be happy about it, but it’s better to accept it.

But that doesn’t mean you can’t take steps to save on tax-related expenses. In fact, if you want to pay less to the IRS in 2024, contributing money to this account could be your ticket to slashing your tax bill.

1.IRA

Anyone with earned income can contribute to an IRA for retirement savings. Now, if you put money into a Roth IRA, you won’t get any advance tax relief. However, if you fund a traditional IRA, your contributions are paid out on a pre-tax basis. This means that every dollar you donate up to the annual limit becomes a dollar of income that the IRS cannot tax. Do not exceed the income limits set by the IRS.

This year, IRA contributions are capped at $7,000 for workers under age 50. If you’re 50 or older, you can donate an additional $1,000, for a total of $8,000.

To be clear, contributing $8,000 to an IRA doesn’t mean you’ll save $8,000 in taxes. The amount of your personal savings is determined by your tax bracket. But if you’re in the 22% range, an $8,000 traditional IRA contribution could mean you could lower your tax bill by $1,760.

2. 401(k) Plan

If you are a salaried worker, you may be able to sign up for a 401(k) plan through your employer. Like IRAs, 401(k)s are available in traditional and Roth forms. However, contributing to a traditional 401(k) can reduce the amount you owe the IRS this year.

In 2024, 401(k) contributions will be up to $23,000 for workers under 50 and $30,500 for workers 50 and older. If your employer matches your 401(k) contributions, the amount they contribute does not count toward your annual limit. So if you’re 35 years old and receive a matching payment of $3,000 from your employer, you can still invest $23,000 directly if you can afford a significant portion of your income.

3.HSAs

If you have high-deductible health insurance this year, you may be eligible to fund a health savings account (HSA). HSAs come in only one type (traditional vs. Roth), and contributions to the account are tax-free, just like a traditional IRA or 401(k).

This year, the maximum limit for HSAs is $4,150 for savers under age 55 with self-only coverage and up to $8,300 for savers under age 55 with family coverage. The limits are $5,150 and $9,300, respectively, for savers age 55 and older.

To qualify for an HSA, you must have a deductible of at least $1,600 for a self-only policy or $3,200 for a family policy. Your out-of-pocket maximum cannot exceed $8,050 for individual coverage or $16,100 for family coverage.

Additionally, some employers contribute money to HSAs on behalf of their workers. its contribution do Included in your annual limit.

There is no reason to pay the IRS more money than you have to. Contributing to this account can help you save a significant amount of money on taxes this year.

WARNING: The highest cash back card we’ve ever seen has a 0% introductory APR until 2025.

This credit card isn’t just good. It is very special as it is used personally by professionals. This card offers 0% APR for new signups for 15 months, up to 5% cashback, and no annual fee!

Click here to read the full review for free and apply in just 2 minutes.

Read reviews for free