5 Frugal Tips To Help You Prepare for Tax Season 2024
As tax season rolls around, it’s natural to start thinking of ways you can save a little money, especially if you think you’ll owe money instead of getting a refund. But even if you get a tax refund, there are still lots of frugal tips to help you make the most of your money as you prepare for tax season 2024.
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1. Contribute to Your Retirement Fund or HSA
Depending on your individual financial situation, contributing money to an individual retirement fund or HSA can reduce the amount you’ll own on your taxes. The IRA contribution limit for 2023 is $6,500 for an individual ($7,500 if you’re 50 or older), $500 more than the limit in 2022. For 2024, the limit was raised again, to $7,000 for an individual ($8,000 if you’re 50 or older).
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If you have a high deductible health plan, you also may be able to contribute to an HSA. Contribution limits for tax-year 2023 are $3,850 for a self-only HDHPs and $7,750 for a family HDHP. The limits increase to $4,150 and $8,300 in 2024. People 50 years old and up can contribute an additional $1,000.
2. Fund Your Sinking Funds
Sinking funds are like mini savings accounts for a specific purchase or purpose. Common sinking fund categories include:
Tax bills
Christmas, birthdays or other holidays
Car and house maintenance
Household bills
Vacations
Larger purchases
You can devote a single savings account to all your sinking fund categories or open a separate account for each one.
3. Complete Energy Efficient Improvements
If you have a little extra money (or, ahem, a sinking fund) to put towards energy efficient improvements for your home, you can reduce electricity bills by installing solar panels, electric or natural gas heat pumps or exterior windows — and get a tax credit in the process. Typically, you can receive a credit for 30% of the cost, but the credit for some items is limited to a specific dollar amount.
4. Pay Off Debt
Paying off your debt means you’ll save money on interest. And the less debt you have, the more money you have to invest in a tax-advantaged retirement account or HSA — or pad your sinking fund.
5. Do a Monthly Budget
Writing out a monthly budget will allow you to see exactly what you’re spending and help you control your expenses. All you have to do is add up your income and then write out all of your expenses for that month. If you come up short, you may be able to cut from one category and move it to another. Common budget categories include:
Mortgage or rent
Groceries
Household expenses
Subscriptions
Bills (electric, water, heat, etc)
Travel
Dining out
Entertainment
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This article originally appeared on GOBankingRates.com: 5 Frugal Tips To Help You Prepare for Tax Season 2024