YOUR TAX PLANNING CHECKLIST FOR 2024
Education
Education costs typically represent a major expenditure . With the cost of education continually increasing , understanding ways to utilize available tax-benefited accounts and tax credits is important .
Use 529 accounts With no income restrictions , these accounts allow tax-deferred growth with no tax on distributions when used for qualifying purposes , including tuition , fees , books , supplies and equipment as well as room and board . They can also be used to pay private school tuition for K1 through 12th grade , up to $ 10,000 per year for the beneficiary , and most student loan debt up to $ 10,000 lifetime . New York and Connecticut provide state tax deductions of up to $ 10,000 ( MFJ ) per year on 529 contributions . There is no deduction in California .
Use American Opportunity Credit ( AOC ) and Lifetime Learning Credit ( LLC ) tax credits Qualified education expenses include tuition , books and enrollment fees . Credit of up to $ 2,500 per student for AOC and $ 2,000 per return for LLC is available . The income limit is $ 160,000 MFJ and $ 80,000 single . The AOC and LLC cannot be claimed by the same student in the same tax year .
Deduct student loan interest Student loan interest is deductible up to a maximum of $ 2,500 per annum for 2024 . Income limits apply – for 2024 , no deduction may be taken where AGI exceeds $ 195,000 ( MFJ ) and $ 95,000 ( Single ).
Permanent Life Insurance
You can borrow against your life insurance without any tax consequences during your lifetime . This won ’ t result in an increase in Medicare premiums as borrowing is not taxable . Returns within the policy grow tax-free . Life insurance proceeds are paid free of income tax and are estate tax-free if received by a person other than the decedent ’ s estate .
Estate and Gift Tax Planning
The estate and gift tax exemption amounts are $ 13.61M per person in 2024 . However , these amounts are due to be reduced to approximately $ 6M per person , effective 1 / 1 / 2026 .
Strategies that can help to minimize the estate and gift tax include :
Fully utilize the historically high Lifetime Unified Gift / Estate Tax exemption
Use the Annual Gift Tax Exclusion amount $ 18,000 per individual recipient of a gift in 2024 .
Charitable gifts of cash For 2024 , gifts of cash to public charities would be deductible up to 60 % of AGI . The AGI limitation for cash gifts to a Donor Advised Fund remains 60 %. All gifts to charity remove the asset permanently from the donor ’ s estate without estate or gift tax consequences .
Charitable gifts of appreciated property These are deductible at Market Value for stocks and real estate , subject to the 30 % AGI limitation . pg . 6