@Pbenitez12 wrote:
" Besides maxing out 401(k) contributions if we currently exceed the 300 K are there any other avenues we can utilize to lower our AGI to take advantage of the tax credit? "
Great question, Pbenitez12!
In addition to maximizing your 401K contributions, there are a few other ways to reduce your adjusted gross income, including the educator expense, the student loan interest deduction and HSA contributions.
- You can claim the Educator expense deduction, regardless of whether you take the Standard Deduction or itemize your tax deductions. The maximum deduction is $300 for one teacher (tax year 2023). Two married teachers filing a joint return can take a deduction of up to $300 a piece, for a maximum of $600.
- The Student loan interest deduction is a deduction of the interest you paid during the year on a qualified student loan. The maximum deduction you can claim is $2,500 this year – but it’s limited by your income, ($90,000, if single, and $180,000 for married filing jointly, for 2023.)
- Health Savings Accounts can lower your madjusted gross income as the money you contribute is non-taxable, just like when you contribute to a traditional 401k or similare retirement accounts. You can contribute up to $3,850 for a self only plan or up to $7,750 for a family plan. Those ages 55 and up, can contribute up to an additional $1,000 as well to their HSA. This contribution can be made up until the due date of your return, so you can decide to make a contribution for the current year up until the tax deadline, for the due date of the return (4/15/2024.) Not all taxpayers are eligible to have an HSA. To qualify, you must be enrolled in a high deductible health insurance plan that meets the IRS requirements.
*For further information on these topics you can reference the following articles:
Teacher Educator Expense
Student Loan Interest Deduction
HSA Contributions
Thanks, and please reach out with any additional questions you may have.
Please feel free to reach out with any additional questions and
thank you so much for attending!
Please have an amazing rest of your day!
Terri H.
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