As we approach the new year, it’s hard to believe that it’s already time to start preparing for the upcoming tax season. Whether you’re an early bird or a last-minute filer, it’s crucial to take advantage of tax-saving opportunities before the year ends. And most tax strategies must be completed by Dec. 31, so there’s limited time to make last-minute moves. “A lot of people wait until after the year is over to then talk to their CPA about filing their taxes. Yet the best time to talk is before the year is over because many things have to be done before December 31st,” said Bill Dendy, a DFW-based attorney and Certified Public Accountant. NBC 5 spoke with Dendy, a tax professional, for more on the key strategies to consider: Maximize Contributions to Tax-Advantaged Accounts If you have a high-deductible health plan, you can add money into a health savings account, or HSA, which offers an upfront tax deduction. You can contribute up to $4,150 for self-only coverage or $8,300 for family coverage. Contributions lower taxable income, and distributions for qualified medical expenses are tax-free. “This is a good time to put that money into the HSA. It’s not subject to the use it or lose it rules,” said Dendy. “We’re able to grow that money virtually tax-free, provided we have qualifying medical expenses in the future.” If you have a retirement account, you can contribute up to $23,000 to your 401(k) or 403(b); those aged 50 or over can add an extra $7,500. Traditional contributions reduce your taxable income dollar for dollar. Harvest Investment Losses Offset capital gains by selling underperforming investments, a strategy known as tax-loss harvesting. This can reduce your taxable income and potentially lower your tax bill. Be mindful of the IRS wash-sale rule, which disallows claiming a loss on the sale and repurchase of substantially identical securities within a 30-day period. “In this last few weeks of the year, I’ve worked with a lot of folks who had maybe losses on investments that they were never going to realize, finding that now because they’ve had such gains and other investments, it’s a good time to realize those losses, to write the letters and surrender partnership interests that will never come back, and to take losses against their capital gains to lower their overall tax liability,” said Dendy. Consider a Roth IRA Conversion Converting a traditional IRA to a Roth IRA means paying taxes now but enjoying tax-free withdrawals in retirement. With potential tax rate increases on the horizon, this could be a strategic move. The deadline to do so is Dec. 31. “For some folks, if they haven’t had a financially big year so far, this may be a year to take advantage of going ahead and paying some taxes on our IRAs to convert those into Roth IRAs,” explained Dendy. “If we are in the 10% and 12% tax brackets, we can pay taxes at 10% and 12% and never pay tax again on that money. So, years into the future, we may look at those 10% and 12% tax rates as gifts. That’s a great condition.” Make Charitable Contributions Donations to qualified charities are tax-deductible if you itemize deductions but it only counts if you make those donations by Dec. 31. Just make sure you still have the receipts or reach out to the organization for a replacement. Review Required Minimum Distributions (RMDs) The IRS requires senior citizens to start withdrawing from their retirement accounts once they reach the age of 73. If you’re 73 or older, make sure that you’ve taken your RMDs from retirement accounts to avoid hefty penalties. Alternatively, consider a Qualified Charitable Distribution (QCD) to satisfy RMD requirements while excluding the distribution from taxable income. “Now the rule is you have to start taking this money out the year after you turn 73 and you have until April 1st to do it. But if you wait till April 1st, you end up taking two in one year. It makes sense to do a little math on that to see what makes the most sense,” said Dendy. “Do not miss that December 31st deadline for taking the money out. This is another area that for those over 70 and a half, they can send that money directly to a charity and not pay any tax on that distribution on their RMD. So for those who are charitably inclined, that’s very powerful.” Evaluate Itemized Deductions vs. Standard Deduction In response to inflation, the IRS has adjusted tax brackets and the standard deduction for 2024. That means many Americans will be able to keep more of their 2024 income. The IRS has bumped up the standard deduction. If you’re married and filing jointly, you’ll get a $29,200 deduction — that’s $1,500 more than last year. If you’re single, it’s now $14,600, and heads of household get $21,900. More deductions mean more of your income is tax-free. If itemizing provides a greater deduction, now is a good time to start collecting documentation for expenses such as medical costs, mortgage interest, state and local taxes, and charitable contributions. Utilize Flexible Spending Accounts (FSAs) FSAs often have a “use it or lose it” policy. Check your plan’s rules and spend the remaining funds on eligible medical expenses before year-end to avoid forfeiture. Plan for Estimated Tax Payments If you expect to owe additional taxes, consider making an estimated tax payment by January 15, 2025, to avoid penalties. This is particularly important for self-employed individuals or those with significant non-wage income. Consult a Tax Professional Tax laws are complex and subject to change. If you had significant life changes this year like getting married, divorced, starting your own business, or claiming unemployment, your taxes may be more complicated and you might need the help of a professional. The average fee for a tax professional can generally run between $200 to $400 or more. However, there’s free assistance out there. The IRS’s volunteer income tax assistance program offers free help for those who qualify. The IRS is also once again offering the new Direct File option that it tested out in Texas last tax season, where you can file your taxes online for free through an easy IRS tool. The program has been expanded to more states this year. Read Up on Tax Breaks and Credits A tax credit or break cuts your tax bill directly and gives you a reduction in the amount of taxes you owe, while a tax deduction or write-off allows you to deduct certain amounts from taxable income. Some of the popular credits this year include the child care tax credit, which is worth up to $2,000 per child this tax season, along with dependent care and adoption credits. The American Opportunity Tax credit lets you claim up to $2,500 spent on tuition, books, and school fees in 2024. There are also deductions for medical expenses, mortgage interest, and even gambling loss. The student loan interest deduction lets borrowers write off money from their taxable income if they paid interest on student loans. Click here to see a full list.