It’s that time of year again..you may have seen your W-2 in the mail recently (it and 1099’s were due to you by Jan 31!) signaling that the countdown to file tax year 2024 has begun!
It’s tricky, we file in 2025, but all of the information you are responsible for gathering took place in 2024.
This year, April 15 falls on a Tuesday. Let this be your warning to get organized and reacquaint yourself with the tax filing process.
Below are some common ways to lower your taxes, and a few credits you may be eligible for that actually put money back into your pocket! And, as always, this is not tax advice, just some friendly information!
Step 1. Income: Gather Your Forms Showing All Sources
Remember, you may have been sent these forms, but if you didn’t, ultimately, it’s on you to go out and find them and include the information on your taxes!
–W-2 from an Employer
–1099 from a Contract Employer
–1099-G from the State of WA for Unemployment Income. You would have already designated whether this income has been taxed or not, so you may or may not owe tax here but the amount earned must be included.
–Self-Employment Income: This income may trigger another 15% of tax due because you are responsible for the employer and employee Medicare/Social Security costs.
–1099-INT Bank Interest Earned on those High Yield Savings Accounts (HYSA)!
–Form 8949 Sales of Any Investments like a house or stocks. These sales very well may trigger capital gains taxes on your profit, the amount will be determined by how long you had the asset, the amount profited, and your income.
Step 2. Deductions: Recognize Where You Spent Money That Might Lower Your Taxes
–Retirement Savings Account. These contributions lower your taxable income, dollar by dollar. For example, if you have $50k of income and you made $5k in pre-tax retirement contributions, you will only pay tax on $45k.
–Health Savings Account (HSA). These contributions work the same as a Retirement Plan, tax-wise, and if you pulled money out of the account, you get the benefit using the money for medical costs tax free! Be sure to designate you took it out for qualified medical expenses.
–Childcare Costs. Depending on your income, you may be able to write off the costs spent on qualified childcare.
Step 3. What Credits Might You Be Eligible For?
Credits Put Money Back Into Your Pocket!
–Child Tax Credit. Up to $2k per qualifying child.
—Working Families Tax Credit. Exclusively for working Washingtonians, this one comes as a refund back to you separately from the State. Eligibility is based on income and family size.
–Saver’s Credit. For contributions made into a variety of retirement savings accounts, even ones that are not tax-advantaged like ROTH accounts. The credit amount is based on income.
–Earned Income Credit: Eligibility based on income and family size.
A Note for the Self-Employed
You should probably pay someone to prepare your taxes for you. This is because you are taxed on your overall income, as well as a self-employment tax in order to cover your Medicare/Social Security on that income in both the Employer & Employee portions. This tax can add-up!
Essentially, you will be paying extra taxes and you want to use every deduction possible to bring down the tax due! The system is set up in such a convoluted way that it’s very possible that you do not know every deduction you are qualified for, and you might spend more tax than you actually owe.
Business Expenses lower your taxable income and you will list these on the Schedule C.
Staying Safe
Lessen the chances you will get scammed! As per usual, the IRS will never call or email you! They are old school and will keep everything in writing via the USPS. If you get a letter from them, do not ignore it, this is typically the only way they will get in touch with you!
If you’re at all concerned with Identity Theft, you can request a PIN from the IRS and they will only process a tax return in your name which has that PIN on it. If they have already issued you a PIN (again, through the mail) include it when you file.
Can’t find your forms? You can also find all of your tax info online through the IRS website by setting up an account at ID.me. Here you can find past filed returns as well as all of the tax forms you have been issued, past and present.
Free Filing Options
File Free with VITA. You may be able to do this online or in person, with a certified tax preparer. As a past volunteer, I can vouch this is a legit community resource. Income limits and eligibility for certain filings may apply.
Free Tax USA recommended resource for free filings online.
Curious what your tax bill might be?
AARP Calculators can help! Plug in your info ahead of time, if you want to get an idea of what your tax bill might be.
Most importantly, is to file, at all. Even if you owe, you may be eligible for a payment plan and will avoid penalties!
You got this!
Unlocking Abundance 