Wealth management

Five last-minute tax tips

With Tax Day fast approaching, here’s how parents, home remodelers and others can trim what they’ll owe the IRS.

3.5 min read

Summary

  • Several last-minute opportunities can reduce your 2024 tax bill—from IRA contributions and energy-efficient home improvement credits to first-time RMDs due April 1.
  • The Child and Dependent Care Credit extends beyond daycare to summer day camps for children under 13, offering credits up to $3,000 for one child or $6,000 for multiple children.
  • While these tips can help with 2024 taxes, the most effective strategy is planning ahead—SEP IRAs, income timing and Roth conversions for 2025 are examples of strategies to consider based on this year’s experience.

Final tax tips for 2024—and thinking ahead for 2025

Preparing for Tax Day is like studying for exams in college. No matter how ready you think you are, there’s that nagging feeling you forgot something important.

With April 15 fast approaching, we’ve identified five last-minute tax tips to help get a refund and avoid writing Uncle Sam a check. Remember, the bulk of your 2024 tax bill is already locked in by this time of year—so this year’s tax return should remind you of the importance of in-year tax planning for 2025.

For example, is your side business ramping up? Consider using a Simplified Employee Pension Individual Retirement Account (SEP IRA) to put aside extra retirement savings—up to 25% of income, with a max of $70,000 for 2025. Expect your overall taxable income to be higher in 2025? Gig workers and freelancers might postpone some December invoicing until January. What if you expect your net income to be lower? It may be a good time for a Roth IRA conversion. Talk to your TIAA financial advisor for more information on SEP IRAs and Roth conversions.

Before you start 2025 strategizing, here are five tax tips that could help with 2024:

1. Take your 2024 required minimum distributions (RMDs) now if you haven’t already.

Tuesday, April 1, is the extended deadline for anyone who failed to take their first RMD in 2024. Holders of most types of retirement accounts, including 403(b)s, 401(k)s and IRAs, are required to take RMDs beginning the year they turn 73. (Those working at or past age 73 are exempt from taking RMDs from current employer-sponsored retirement accounts.) Don’t wait until the last minute because penalties for missing RMDs are serious—10% of the missed distribution if rectified within two years and 25% if not. If you’re an RMD first-timer, however, you’ve still got several days to act.

2. Your preteen children may qualify for the Child and Dependent Care Credit (CDCC), even if it’s just to help pay for summer camp.

Designed to help working parents, the CDCC is worth between 20% and 35% of eligible care expenses, depending on income level. The maximum credit is $3,000 for one child under age 13 and $6,000 for two or more. While the CDCC is often associated with nanny and daycare expenses, it can also be applied toward some after-school programs and summer camps. According to the IRS , the summer camp must be a day camp and not an overnight camp, but specialty camps—soccer, computer, etc.—generally qualify.

3. You still have time to make 2024 contributions to your IRA.

The IRS deadline for making 2024 contributions to an IRA is April 15, 2025. IRA contribution limits for 2024 are $7,000 for those under age 50 and $8,000 for those over 50. If you can afford to max out those contributions, but haven’t done so already, you could be leaving some tax savings on the table. Contributions made to a traditional or pretax IRA can reduce your 2024 taxable income if you fall under certain income limits—$87,000 for single filers and $143,000 for married joint filers. For Roth IRAs, you can make contributions (with after-tax dollars) only if your taxable income is below $240,000 for married couples filing jointly and $161,000 for single filers.

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4. Don’t forget about the Energy Efficient Home Improvement Credit if you purchased energy-efficient doors, windows or home appliances last year.

Thanks to the Inflation Reduction Act of 2022, tax credits of up to $2,000 are available on heat pumps, heat pump water heaters, biomass stoves and biomass furnaces that meet the Consortium for Energy Efficiency’s top efficiency standards. Other home improvement tax credits of up to $1,200 are available on air conditioner units, boilers, exterior doors, exterior windows, furnaces and insulation with the Energy Star label.

5. Claim a tax deduction for your gambling losses.

With March Madness in full swing, gambling losses may be a sore subject right now. If you’re an active bettor, you probably lost more than you won last year because, let’s face it, the house almost always wins (a reason not to be an active bettor). The IRS considers your winnings taxable income, no matter how much you lost overall. Fortunately, some of your gambling losses are tax deductible. The big catch is you can only deduct gambling losses up to the amount of your total winnings. So if you lost $3,000 betting on the Yankees to win the World Series last year but won $1,000 betting on UConn to win the NCAA Division 1 men’s basketball tournament, only $1,000 of your Yankees losses are tax deductible.

Personalized tax planning

For more help with tax planning, please schedule a meeting with a TIAA advisor, who can collaborate with your accountant and other advisors to identify potential opportunities to optimize your taxes.

Call 844-567-9077, or schedule time with us.

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The TIAA group of companies does not provide tax or legal advice. Tax and other laws are subject to change, either prospectively or retroactively. Individuals should consult with a qualified independent tax advisor and/or attorney for specific advice based on the individual’s personal circumstances.

The views expressed in this material may change in response to changing economic and market conditions. Past performance is not indicative of future returns. This material is for informational or educational purposes only and is not fiduciary investment advice, or a securities, investment strategy, or insurance product recommendation.

This material does not consider an individual’s own objectives or circumstances, which should be the basis of any investment decision.

Investment, insurance and annuity products are not FDIC insured, are not bank guaranteed, are not deposits, are not insured by any federal government agency, are not a condition to any banking service or activity and may lose value.

Advisory services are provided by Advice & Planning Services, a division of TIAA-CREF Individual & Institutional Services, LLC, a registered investment adviser. TIAA-CREF Individual & Institutional Services, LLC, Member FINRA, distributes securities products.

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