Taxes

2024 Tax Return Tips

By Chris Duderstadt

January 13, 2025

2024 Tax Return Tips


Key Points – 2024 Tax Return Tips

  • Get Ready for the 2024 Tax Season with Our Tax Return Tips
  • Avoiding the Underpayment Penalty on Quarterly Estimated Payments
  • Triage Planning for Your 2024 Tax Return
  • Standard Deduction vs. Itemized Deductions
  • 2-Minute Read | 6-Minute Watch

A Few Dates to Note

While Tax Day isn’t until April 15 each year (unless April 15 falls on a weekend), why wait until the last minute to file your 2024 taxes?  The IRS recently announced that January 27th is the start of tax filing season. Here are a few things you need to know when it comes to filing your 2024 tax return.

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Completing Your Estimated Payments

Are you all squared away on your fourth quarter income? The deadline for Q4 2024 estimated payments is January 15. The underpayment penalty is 8%, so it may make sense to send the IRS money ahead of time if you need to.1 Also, note that the underpayment penalty will decrease to 7% for Q1 2025, but that won’t impact your 2024 tax return.2

When you do your 2024 tax return, you won’t do the standard calculation for the underpayment penalty. You’ll use the annualized method where your income came in for each quarter. That can help mitigate the underpayment penalty.

Methods to Avoid the Underpayment Penalty

The IRS lists two different methods for how to avoid the underpayment penalty.3 One option is indicating on your filed tax return that you owe less than $1,000. The other is paying a minimum of 90% of the tax indicated on your return for the 2023 tax year if it’s less than $1,000. If your adjusted gross income for 2024 was more than $150,000, you’ll need to pay 110% of your estimated payment.

Keep This in Mind for 2025 Tax Returns

If you get behind on your quarterly estimated payments and have money in an IRA, you have the opportunity to take a distribution and make most of it federal and state withholding and get a check, let’s say for $1,000 as an example. Then, reach back into your brokerage account and do a 60-day rollover, which you can do once every 12 months. The IRS considers that as being paid in equally throughout the year.

Triage Planning for Your 2024 Tax Return

As we head into 2024 tax season, our CPAs will be focused on triage planning. When they’re reviewing tax returns for our clients, they’re looking for potential missed opportunities. For example, what if you didn’t fully fund your HSA? You have until April 15 to do that. For some people who are over 59½, it may make sense a deductible IRA contribution. You could take it out next year and pocket some of the money that the government gave you to put it in there.

Standard Deduction vs. Itemized Deductions

One of our final episodes of America’s Wealth Management Show for 2024 featured Martin James, CPA, PFS, and Dean Barber discussing whether to take the standard deduction or itemizing deductions. If the Tax Cuts and Jobs Act sunsets as scheduled after 2025, the standard deduction amount would potentially be cut in half. That could lead to more people itemizing on their 2025 tax returns in 2026. That’s one of many things to consider when doing year-end tax planning at the end of 2025.

Why We’re Passionate About Tax Planning

At Modern Wealth, our CPAs continue to look for tax planning opportunities during tax preparation season. Your goal shouldn’t just be to pay as little tax as possible in a given year. Your goal should be to utilize strategies that can lower the amount you pay in taxes over your lifetime. Don’t lose sight of that as you’re filing your 2024 tax return. If you have any questions about what we’ve covered and/or as you’re gathering your tax documents, start a conversation with our team below.

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Resources Mentioned in This Article

Other Sources

[1] https://www.irs.gov/newsroom/interest-rates-remain-the-same-for-the-third-quarter-of-2024

[2] https://www.nerdwallet.com/article/taxes/underpayment-penalty-what-it-is-how-to-avoid-it

[3] https://www.irs.gov/payments/underpayment-of-estimated-tax-by-individuals-penalty

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The views expressed represent the opinion of Modern Wealth Management a Registered Investment Advisor. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Modern Wealth Management does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.