2024 Year-End Tax Strategies for Families and Small Businesses

As the year comes to a close, it’s the perfect time to implement year-end tax strategies for families and small businesses. These strategies can help you save money while ensuring your finances are in top shape for 2024. Whether you’re a parent running a small business, planning a wedding, or finalizing a divorce, there are smart tax moves you can make right now.

In this guide, we’ll explore actionable steps to optimize your taxes, from hiring your children to navigating marriage and divorce rules. Don’t miss these opportunities to lower your tax bill before December 31!

DALL·E 2024-12-04 23.30.22 - A realistic family scene focused on 2024 year-end tax planning.

1. Hire Your Kids for Your Business

If your children under 18 helped in your business this year, paying them could result in significant tax savings. But there’s a catch—you must pay them properly. That means issuing them a W-2, not a 1099.

Benefits for Sole Proprietors and Partnerships

No payroll taxes. When your business is a sole proprietorship, single-member LLC, or spousal partnership, neither you nor your child pays federal payroll taxes on their wages.
State tax savings. In most states, these wages are also exempt from state payroll taxes.
Income tax-free earnings. Your child can earn up to $14,600 tax-free, thanks to the 2024 standard deduction.

Example: How It Works

Let’s say you pay your 14-year-old $11,800 in fair wages for work they performed. Here’s what happens:

You deduct $11,800, saving $4,366 in taxes if you’re in the 37% tax bracket.
Your child pays no taxes, thanks to the standard deduction.
They can put up to $7,000 into a Roth IRA, setting them up for a strong financial future.

Pro Tip: Operating as a corporation? You’ll face payroll taxes, but the strategy still offers solid benefits for your family.

2. Plan Marriage and Divorce Dates Wisely

Did you know the IRS considers you married for the entire year if you’re married on December 31? That simple rule can have big tax implications.

If You’re Getting Married

Filing jointly often results in a lower combined tax bill.
Consider tying the knot before December 31 to maximize your savings for the year.

If You’re Getting Divorced

Waiting until January 1 to finalize your divorce could help you retain benefits tied to filing jointly for 2024.
Be mindful of alimony rules. Agreements made after December 31, 2018, mean alimony is not tax-deductible for the payer or taxable for the recipient.

Take Action: Run the numbers with your tax preparer to determine how your marital status affects your taxes.

3. Maximize Mortgage Interest Deductions

Owning a home with someone you’re not married to? Staying single might give you a bigger tax break.

Two unmarried co-owners can deduct mortgage interest on loans totaling up to $2 million (if purchased before December 15, 2017).
Married couples are limited to a $1 million deduction cap, or $750,000 for homes purchased after that date.

Strategy Tip: Consider your marital status carefully if you co-own a home.

4. Give Stock, Not Cash, to Loved Ones

Do you support family members financially? Giving them appreciated stock instead of cash can create big savings.

Why This Works

If your loved one is in the 0% capital gains tax bracket (single with under $47,025 or married filing jointly with under $94,050), they can sell the stock tax-free.

Example

You gift Aunt Millie $20,000 worth of stock you bought for $2,000. If she sells it, she pays no capital gains tax. Had you sold it, you’d owe $4,284 in taxes if you’re in the 23.8% tax bracket.

5. Use the 0% Tax Bracket to Your Advantage

If you regularly give money to loved ones, think beyond cash gifts. Appreciated stock can be a smarter choice. This strategy works particularly well if the recipient is in a low tax bracket and doesn’t face kiddie tax rules.

Did You Know? The kiddie tax only applies to unearned income, like dividends or interest—not wages.

Takeaways for 2024 Year-End Tax strategies

Year-end tax planning can help you save thousands. Here’s a quick recap:

Hire your children under 18 for tax-free wages and retirement savings opportunities.
Plan marriage or divorce dates strategically to optimize tax benefits.
Take advantage of higher mortgage deductions if you’re unmarried.
Gift appreciated stock instead of cash to family members in lower tax brackets.

Each of these strategies requires careful planning and documentation, so consult with your tax professional to get it right. Don’t leave money on the table—act now before December 31!

For questions on implementing these tax strategies, feel free to reach out at (657) 413 0211.

To learn how to earn tax-free income with the Augusta Rule, we have this article with all the information you need.

EIN? What is it and how can you apply for it for your business? Read about it here and follow the IRS guidelines and set your business up for success by applying for an EIN today!