Actions to Take Before 2024 Ends to Qualify for Specific Tax Credits

The end of the year can feel overwhelming, but it’s also a time to set yourself up for credits and deductions that can put real money back in your pocket come tax time this April. From the Earned Income Tax Credit to residential energy improvements and even adopting a child, there are a wealth of opportunities to lower next year’s tax bill or increase your refund.

Here’s a quick guide to the top tax credits for 2024 and actionable steps you can take now to help you maximize your savings:

What to Do: 

• Ensure you have earned income from wages, self-employment, or other qualifying sources.
• Keep accurate records of your income and any dependents.

Tip: Even if your income is low, file a tax return to claim this credit, as it is a refundable credit, meaning you can get a refund, even if you didn’t pay taxes due to low income.

What to Do:

• Make sure your children have valid Social Security numbers before 12/31/2024.
• Ensure dependents meet the criteria (under 17 years old).
• Keep documentation like birth certificates, school records, and proof of residency.

Tip: Ensure both parents agree on who will claim the child, if filing separately.

What to Do:

• Pay for childcare or dependent care expenses by December 31, 2024.
• If you will not qualify because of too much income next year, and you have not yet maxed out your Child & Dependent Care Credit this year, consider paying in advance before end of year for services that will be delivered in 2025.
• Obtain your childcare provider’s Tax ID (EIN or SSN) and keep records of payments.
• Ensure the care is provided so you (and your spouse, if married) can work or look for work.

What to Do:

• Pay for qualified education expenses (tuition, fees, books) by the end of 2024.
• Ensure your educational institution issues a Form 1098-T.
• Verify that you or your dependent is enrolled at least half-time for the AOTC.

Tip: The AOTC is only available for the first four years of higher education.

What to Do:

• Contribute to a retirement account (e.g., 401(k), 403(b), IRA) by December 31, 2024.
• For Traditional or Roth IRAs, you have until the April 15, 2025 deadline to contribute.
• Even if you will not make your contribution until next year, get your account setup before the end of this year.

Tip: Even small contributions can qualify for this credit.

What to Do:

• Enroll in a Health Insurance Marketplace plan during the 2024 open enrollment period.
• Report any income changes to the Marketplace to adjust advance premium credits accurately.
• Keep records of your health insurance premiums (Form 1095-A).

What to Do:

• Complete the adoption process or incur adoption-related expenses by the end of 2024.
• Keep detailed records of qualified adoption expenses (e.g., fees, court costs, travel).
• Ensure you have the necessary documentation for the adopted child.

What to Do:

• Make qualifying energy-efficient home improvements (e.g., insulation, windows, HVAC) by December 31, 2024.
• Install renewable energy systems (solar panels, wind turbines, battery storage).
• Obtain and keep receipts, invoices, and Manufacturer’s Certification Statements.

Tip: Check the eligibility of improvements to maximize the credit.

What to Do:

• Enroll in a Health Insurance Marketplace plan during the 2024 open enrollment period.
• Report any income changes to the Marketplace to adjust advance premium credits accurately.
• Keep records of your health insurance premiums (Form 1095-A).

What to Do:

• Contribute to your HSA (up to $4,150 for individuals and $8,300 for families in 2024) by December 31, 2024.
• Use your FSA funds by the end of 2024 or the plan’s grace period to avoid losing the money.
• Keep receipts for qualified medical expenses.

As your Personal Family Lawyer® Firm, we understand that tax planning is just one piece of your overall financial picture. That's why we have a comprehensive Life & Legacy Planning® process that takes into account not just your estate planning needs, but also helps you make informed decisions about your finances that can benefit you and your family both now and in the future. We'll help you understand how different financial choices – from energy improvements to adoption – can impact your tax situation and overall financial wellbeing. We're here to support you in making educated decisions that align with your family's goals and values.

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