The ColoHealth Health & Wealth Newsletter
January 2024
Vol. 14, Issue 1
7 Money-Saving Tax Tips for 2024
1. Maximize your deductions for tax year 2023
It’s not too late to make contributions to your retirement plans for tax year 2023.
You have until April 15th to top-off your contributions to your IRAs, HSAs, and Roth IRAs for the last tax year.
The maximum total contribution for health savings accounts for tax year 2023 is $3,850 for self-only coverage and $7,750 for family coverage. Those 55 and older can contribute an additional $1,000 in “catch-up contributions.”
These limits are for individual and employer contributions, combined.
And you have until April 15th to contribute the full amount.
The IRA contribution limits for 2023 are $6,500 for those under age 50 and $7,500 for those 50 and older. That’s true for traditional and Roth IRAs. You can contribute to both, if you meet the income limitation for the Roth IRA.
But the combined amounts cannot exceed the $6,500/$7,500 thresholds, respectively.
2. Maximize your HSA contributions
Thanks to inflation, Congress significantly increased your allowable HSA contributions for 2024 compared to the previous year.
For tax year 2024, the maximum allowable HSA contributions—including both individual and employer contributions—are as follows:
- $4,150 for self-only coverage – up from $3,850 last year;
- $8,300 for family plans – up from $7,750 last year.
- Those age 55 and older can make an additional $1,000 in “catch-up” contributions.
If you were making automated monthly contributions, either directly, or via payroll deduction, you may want to increase your monthly contribution to reflect the increased limits.
Read more: HSA Strategies for Tax Savings
3. Start tracking business expenses now
January 1st is a great time to implement a system for tracking all your business expenses for the year.
If you are self-employed or own a small business, now’s the time to create your Schedule C, and start filling it out.
Have a system for keeping receipts. Or use a mobile phone app to photograph, categorize, and store them on the Cloud. You’ll need this in case you get audited.
That way, filing your annual or quarterly taxes is a snap!
4. Track vehicle mileage
Did you drive your own car for work?
Or for medical purposes? Or for charitable purposes? You can deduct money from your taxable income for every mile you drive.
For 2023, the standard deduction was
- 65.5 cents per mile driven for business use, up 3 cents from the midyear increase setting the rate for the second half of 2022.
- 22 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces.
- 14 cents per mile driven in service of charitable organizations.
The mileage rates for 2024 haven’t been announced yet. But you should start tracking mileage anyway. Put a clipboard or notebook and pen in your car, or use an automated cell phone mileage tracker.
5. Claim the business use of home deduction.
If you run your business from home, you may be eligible for a home office deduction.
Understand the criteria outlined in IRS Publication 587, which provides details on claiming this deduction.
6. Own long term care insurance
Health insurance generally doesn’t cover long term care costs.
Neither does Medicare.
That’s where long-term care insurance comes in.
Qualified long-term care premiums are deductible. The amount you can deduct depends on your age. But unless you expect to be tremendously wealthy or indigent in retirement, you should consider owning a long-term care policy.
For more information, click on my calendar and make an appointment for a free case analysis and quote.
Note: Unlike health insurance, long term care insurance is medically underwritten. That means you could be turned down, or required to pay more if you have health issues. The best time to buy long term care is now, before an unexpected health problem comes up.
7. Buy an electric vehicle
If you’ve been on the fence about buying an electric car, the deal just got a lot sweeter for Colorado residents.
There’s a new Colorado state tax credit worth up to $5,000 for people who purchase a qualifying electric vehicle.
The tax credit is up significantly from the previous $2,000 max tax credit, and is good for electric vehicles with an MSRP of up to $80,000.
You can get the credit with either a purchase or lease of a new qualifying electric vehicle.
You can read more about it here.
What to Do Now
Each of these tips is designed to be specific and actionable.
Not all of them will make sense for every circumstance. But most of them are very doable – and can make a big difference for your financial security over time. Especially if you are a business owner or have self employment income.
Need more information? The best thing to do is to work closely with a qualified tax advisor, and to contact your Personal Benefits Manager who sent you this newsletter if you’d like to look into long-term care coverage.
They can help you design your plan, and make sure any solutions you purchase are suitable for your individual circumstances.
To Your Health and Wealth,
Wiley P. Long III
President- ColoHealth
The ColoHealth Health & Wealth Newsletter is published monthly and emailed to subscribers at no charge. Subscribe now to stay on top of the critical information you need to know about health insurance, healthshare plans and managing your finances to achieve financial security.
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