There’s still time to maximize your 2024 tax advantages with Tax-Advantaged Accounts (and why you should take a closer look at your HSA)

I know tax season can feel overwhelming, but I have good news – there’s still time to make strategic moves that could significantly reduce your 2024 tax burden. Let’s explore some valuable opportunities that are available right up until the tax filing deadline of April 15, 2024.

Traditional IRAs remain one of the most powerful tax-saving tools available. For tax year 2024, you can contribute up to $7,000 (or $8,000 if you’re 50 or older), and here’s the encouraging part – you can still make this contribution right up until April 15, 2024, and have it count for your 2024 taxes. When you contribute to a traditional IRA, you’re essentially giving yourself a tax break today while building your retirement nest egg for tomorrow. Your contributions typically reduce your taxable income dollar-for-dollar, which could potentially lower your tax bracket or help you qualify for other tax benefits.

black and silver calculator beside black pen

The Roth IRA offers a different but equally valuable approach to tax-advantaged saving. While contributions aren’t tax-deductible now, you benefit from tax-free growth and tax-free withdrawals in retirement. Like the traditional IRA, you have until April 15, 2024, to contribute up to $7,000 (or $8,000 if you’re 50 or older) for the 2024 tax year. While this won’t reduce your 2024 tax bill, it’s an investment in tax-free retirement income that could prove invaluable in your later years. I encourage you to consult with a financial advisor who can help determine whether a Roth IRA, traditional IRA, or both would best serve your unique situation.

Health Savings Accounts (HSAs) are perhaps the most underappreciated tax-advantaged account available. An HSA offers a remarkable “triple tax benefit.” First, your contributions are tax-deductible, reducing your taxable income in 2024. Second, if you choose to invest a portion of the funds, they can grow tax-free in your account. Third, when you use the funds for qualified medical expenses, withdrawals are completely tax-free. For 2024, if you have a qualifying high-deductible health plan, you can contribute up to $4,150 for individual coverage or $8,300 for family coverage, with an additional $1,000 catch-up contribution if you’re 55 or older.

What makes HSAs particularly powerful is their flexibility. Unlike many other tax-advantaged accounts, HSAs have no “use it or lose it” provision. Your money remains in the account year after year, potentially growing tax-free, and can be used for current medical expenses or saved for healthcare costs in retirement. Remember, you can still establish and fund an HSA for tax year 2024 up until April 15, 2024, potentially creating significant tax savings on your 2024 return.

In my experience working with clients, I often see people who have an HSA through their employer but contribute only a minimal amount and use it for current-year expenses. While using these funds for immediate qualifying medical expenses does provide a valuable tax-free benefit, many don’t realize they can contribute additional funds beyond their payroll deductions – even in 2025. You might also consider opening a separate HSA focused more on long-term investing and fund it up to your remaining contribution limits.

While setting up your own Roth IRA, traditional IRA, or HSA is certainly possible, as a financial advisor with a tax background, I would be honored to help guide you through this process. Together, we can develop a strategy that maximizes these tax advantages while supporting your long-term financial goals.

Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Advisory services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Hill Financial Solutions and Cambridge are not affiliated. Cambridge does not offer legal or tax advice.

j scott hill
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As a Certified Financial Planner™ professional, and a trained anthropologist, I understand that finances are an important part of a happy and fulfilling life. Originally from Delaware, I now live in Gettysburg with my family and enjoy cooking, gardening, playing music, talking, and a variety of outdoor activities.

I share financial advice with the Adams County community through my business, Hill Financial Solutions.

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