Anyone else attend a lot of Columbia, SC graduation ceremonies and parties this past weekend? This time of year seems to be bursting with them. 

The thing that strikes me about a graduation is not simply the commemoration of all the hard work these teens put in to get there. It’s the collective looking ahead that gets me. 

Graduates on the cusp of a new chapter of their lives. There’s excitement and possibility for them, but as any adult well knows, there’s also a wide broad world of choices to be made. Some of them will be good, others may herald failure. 

That can be daunting to face on your own — as an adult, but especially as a barely legal one. It’s why, if they’re smart, these kids will lean into the experience of their parents and teachers and mentors to help them know how to move forward. 

Recognizing you need help to make good decisions with your life when you have limited perspective is essential. The same goes for tax efficiency. 

Taxes are nuanced and complex and making the wrong decision with them is easy. But there are some good choices to make to help you not pay the IRS anymore than you need to. It just takes a little guidance from someone who knows what they’re doing.

Let me help show you the way… 

Five Tax Efficiency Strategies for Columbia, SC Planners 

“Plans are worthless, but planning is everything.” — Dwight D. Eisenhower

If the only time you think about your taxes is during filing season, then you’re almost certainly operating in tax inefficiency. And, seeing as how we’re well past tax season (at least for most people), what should you be doing in these “off” months? 

Or, to be more specific, what moves should you be making now to improve things next year? You don’t want to be smacking your head because you realized you could have made moves A, B, and C and brought down the amount you owed the IRS. Don’t skip past some choices you could be making to position you better in January 2025.

With our country facing a mixed economic outlook and inflation rates hovering around 3.36 percent, proactive tax planning just looks like sound decision-making with personal finance management.

Here are 5 things you can do to lean into tax efficiency for the rest of the year:

1. Adjust your withholding

Inflation is making its mark on salaries and increasing tax brackets. So, you don’t want to overlook the possibility that you’ll need to adjust your withholdings accordingly. 

If your salary adjustments haven’t kept pace with inflation, you might be over-withheld, which means some of your income getting tied up that could otherwise help manage the higher living costs you’re experiencing. You can use the IRS’s Tax Withholding Estimator (which adjusts for inflation and its effects) to figure out what you should be withholding. 

Make sure you have on hand your 2023 tax return and documents for any form of income.

2. Time your contributions

During economic downturns, if you leverage your deductions strategically, you can maximize your tax savings. For example, if you know you’ll be netting a higher income next year, consider postponing large charitable donations. This way you can capitalize on deductions against a higher tax rate. 

Or if you get a big bonus at work, consider putting more money into your 401(k) or traditional IRA to lower your taxable income. This might keep you from bumping up into a higher tax bracket, which will save you money right now and help you plan better for the future. 

3. Lay claim to every credit you can

Expecting a child this year? With the Child Tax Credit, you can get 2K per child under age seventeen, and the credit is refundable up to 1.7K under the additional tax credit stipulations. That could mean significant financial relief for you as you dole out money for baby food and diapers. 

Or, if you joined the remote work force and work from home, you could claim your home office space. The home office space must be used regularly and exclusively for business purposes (more here).

In the name of tax efficiency, make sure you’re utilizing every available tax credit for your situation. The IRS’s list of credits and deductions is a good starting place.

4. Make smart investment decisions

In volatile markets, selling off investments that have incurred losses to offset gains in other areas (aka tax loss harvesting) can be a wise tax efficiency strategy. For instance, amid the 2024 market fluctuations, tax-loss harvesting could offset capital gains taxes, which could otherwise escalate due to short-term market rallies. (I recently covered capital gains tax strategies more in-depth if you want more insight on this one.)

5. Plan ahead for big life changes

Big life events are exciting and have a lot of impact on every area of your life, including your taxes. If you want to stay on top of your tax efficiency, make sure you’re planning for that impact. 

If you’re going to be newly married, you could benefit from filing jointly due to higher income thresholds and a larger standard deduction of 27.7K for 2024. Or if you’ll be purchasing your first home, you could consider deducting mortgage interest and property taxes to lower taxable income (though you’ll need to itemize your deductions instead of taking the standard deduction in order to do this).

6. Be aware of Washington’s doings

Stay aware of legislative changes to tax laws. For example, the Tax Relief for American Families and Workers Act has passed the House, but is still waiting a vote in the Senate. This particular piece of legislation aims to expand the Child Tax Credit and adjust rates for inflation. That could mean some much needed relief for you if you’re in the qualifying income bracket for the expanded credit.  

Remember though, we’ll always keep you in the loop about updates and changes like this. It’s one of the things I pride myself on — keeping my clients tax savvy.  

Now, you’ve got a lot of things to stay on top of in your life and while you can determine which proactive planning moves you’ll make, you could also save yourself some time and effort by leaning into a pro. Relying on someone who comes up with tax efficiency strategies in their sleep could mean the difference for you in 2024.

My Richland County team can help you leverage real data from your life’s financial doings and use our tax knowledge to help you manage your tax efficiency, whatever the economy holds.

If you’re ready to strategize, we’re right here:

calendly.com/rejoicetax

Saving on taxes is what we help you do,
Akuathayre Snell