Presented by Andy Whitman, PhD, Licensed Attorney, Tax Preparer & Volunteer Financial Planner at Prepare + Prosper.

Choose the moves that are right for you. Everyone's tax situation is different, consult with a tax professional to come up with a financial plan well before year end.

1. If deductions will add up to more than the standard deduction of $14,600 for single filers and $29,200 for legally married couples for 2024, consider itemizing. Then track deductions and consider "bunching” for charitable donations well before year end. Reconsider itemizing if you bought a house or had large out-of-pocket medical expenses this year. Consider "bunching" several years' worth of charitable donations into the current tax year. (Learn more about tax-smart charitable giving strategies.) 
2. Conversions to Roth IRAs, consider well before Dec. this year. Use a Roth IRA Conversion Calculator, one is at Fidelity Investments called Conversion Analysis. With market volatility and possible tax increases in the future, consider a Roth conversion, in which you transfer money from a traditional IRA into a Roth IRA. 
3. A conversion can let you tap into the advantages of a Roth account, including no RMDs and tax-free withdrawals in retirement. While you'll have to pay taxes on the amount you convert, potentially rising tax rates means there could be an advantage to getting that tax out of the way now. Lower stock prices could also reduce the tax hit on converted money. If you're a high earner, consider a backdoor Roth IRA. 
4. Investment Tax-losses may offset investment gains by up to $3,000. Also estimate Mutual fund distributions. Do it well before the year end. 
5. Increase your own and family/lucky friend’s contributions to Roth & Traditional IRA, and pretax accounts. You have until the federal tax filing deadline in April 2025 to contribute to anyone’s account. The contribution limit is $7,000, or $8,000 if the account owner is 50 or older. Contributions to a traditional (not Roth) IRA may provide current-year tax reduction. There can be future tax advantages to making Roth contributions. (Read more about deciding between a traditional or Roth IRA.) 
6. Plan for RMDs: The SECURE 2.0 Act increased the age at which owners of certain retirement accounts must start taking required minimum distributions (RMDs) from 72 to 73, starting January 1, 2023. (Starting in 2033, the age at which RMDs must start pushes back even further to age 75.) Make Charitable Donations (QCD) from your IRA, but carefully document each QCD, and tell you tax preparer since some prepares may miss the QCD, making the distribution taxable. 
7. Withdrawals from retirement accounts, 401(k)s, 403(b), and IRAs are taxable, but there are ways to reduce the bite with planning well before year end. Avoid penalties for failing to take RMDs. Starting in 2023, the SECURE 2.0 Act decreased the penalty for failing to take an RMD to 25% of the RMD amount not taken (from its previous level of 50%). The penalty can be reduced to 10% if the account owner withdraws the RMD amount previously not taken and submits a corrected tax return in a timely manner. 

8. People who buy new electric vehicles including electric bicycles, may be eligible for a tax credit of up to $7,500, and used electric car buyers may qualify for up to $4,000. Clean Vehicle Tax Credits Use Form 8936 to figure your credit for clean vehicles you acquired and placed in service during your tax year. Also use a separate Schedule A (Form 8936) to figure the credit amount for each vehicle that qualifies for the credit. https://www.irs.gov/forms-pubs/about-form-8936. New in 2024, consumers can also opt to transfer the credit to an eligible dealer instead for an immediate discount on the vehicle at the point of sale. Jun 3, 2024. In accordance with new IRS regulations, beginning January 1, 2024, Clean Vehicle Tax Credits must be initiated and approved at the time of sale. Unfortunately, it won't be a handful of cash at the dealership. Essentially, the dealer will advance you the credit, by reducing the loan or using it for a down payment. The IRS will pay the dealer back. Buyers are advised to obtain a copy of the IRS’s confirmation that a “time-of-sale” report was submitted successfully by the dealer. Check to be certain your dealer can give you the EV Tax credit. The dealer must be registered on a new platform, IRS Energy Credits Online, for a buyer to receive a point-of-sale EV tax credit. Go to IRS publication 5900 to learn more! 

   Some cars and trucks also qualify for a state rebate or tax credit. The MN Commerce Department is processing additional tax credits for electric Vehicles and electric bikes. Denise Lindom, Community Capacity Building Coordinator, 651-539-1881, mn.gov/commerce, Minnesota Department of Commerce: 

9. Energy Efficient Home Improvement Credit If you make qualified energy-efficient improvements to your home after Jan. 1, 2023, you may qualify for a tax credit up to $3,200. https://www.irs.gov/credits-deductions/energy-efficient-home-improvement-credit. 
10. Minnesota Property Tax Refunds: 
    1. Homeowners -- Back to 12% increase for special refunds;  No augmented refunds 
    2. Renters For 2024 -- renter refunds will be claimed on the individual income tax return 
    3. Income will be based on AGI rather than household income 
    4. Homeowners still have to apply separately on the M1PR 
11. Register for free IRS Volunteer Income Tax Assistance (VITA) and the Tax Counseling for the Elderly (TCE) programs for taxpayers who are 60 years or older, or “Earn $64,000 or less; or Have a disability; or Need language support; Get help through VITA and TCE. 
    1. Register for free tax filing at AARP & Prepare + Prosper: Register for AARP tax filing: https://www.aarp.org/money/taxes/aarp_taxaide.html 
    2. Register for Prepare + Prosper tax filing and economic assistance. https://prepareandprosper.org/ 
    3. For federal housing projects or organizations serving low-income households. You must apply and receive a capacity allocation, and then place your facility in service to claim this bonus. Taxable Entities Not eligible, unless Taxpayers make certain elections for Credits. https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free

Registration required to attend and for a recording:  https://umn.zoom.us/meeting/register/tJ0sdOChqzoqGtKhHZLuCKVYD0mM-W_U7Y2_

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Tell me your stories--- -- I've heard "horror" stories from people who were referred to well-advertised tax processors. Better yet, please tell us about tax professionals you know who are accepting new clients 

~ Andy Whitman, FLC moderator
[email protected], 612 747 6015