George Kamel - Do This Now To Pay Less Taxes In 2025

Episode Date: November 29, 2024

💵 Start your free budget today. Download the EveryDollar app!   Who wants to owe the government more in taxes when that money could be going to your French bulldog fund (these Frenchies are expensive!)? In this episode, find out eight tips to help you save money on your taxes in 2025.  Next Steps:  🎥 Watch my video 5 Tax Myths Broke People Believe.  Get free tools and guides that'll help you file taxes the Ramsey way.  Find a tax pro you can trust to take taxes and stress off your plate.  Connect With Our Sponsors:  🔒 Get 20% off when you join DeleteMe.  💸 Learn more about opening a high-yield savings account with Laurel Road.  📱 Visit Tello for more details.  Explore More From Ramsey Network:  🎙️ The Ramsey Show    🍸 Smart Money Happy Hour  💸 The Ramsey Show Highlights  🧠 The Dr. John Delony Show  💡 The Rachel Cruze Show  💼 The Ken Coleman Show  📈 EntreLeadership    Ramsey Solutions Privacy Policy  Learn more about your ad choices. Visit megaphone.fm/adchoices

Tax day might seem far off, but some of us are getting the festivity started early. And for good reason, there are some money moves you can make before the end of the year that could have a huge impact on how much you'll owe. And if you're like most people, a little extra cash could go a long way right now, because those Viori joggers ain't cheap. Ath leisure, more like ath luxury. Am I right? You have no idea.

In today's video, we're going to look at eight tips to help you save money on your taxes in 2025, so you can avoid overpaying the IRS and use more of your hard-earned cash for $98 sweatpants that are nice enough to wear for running errands. But before we get started, click those like and subscribe buttons and share this video with everyone you know who would like to keep Uncle Sam's pilfering little patriotic paws out of their pockets. It's a lot of alliteration for one day.

I'm exhausted. Okay, this first tip is something that is super easy to do. Check your paycheck withholding. Every time you get a paycheck, your employer withholds taxes to send to the IRS. When tax time rolls around, you find out if you had too much or not enough taxes withheld from that paycheck.

Withheld too much, you're going to get a little refund. Withheld too little, you'll have to pay the IRS. So if you had a giant refund last year or you had a mild panic attack because you owed the IRS a small fortune, get with your HR department to adjust your withholdings and make sure you do this before the end of the year. There's a decent calculator on the IRS website to figure this out. What? I know. I'm as shocked as you are.

But remember, the goal is not to get a big refund because that just means you loan the government your money all year long for free. Zero percent interest. You deserve better. Instead, you want to get to as close to zero as possible. You don't owe anything, and you're not getting a faux refund that was already your money to begin with. Okay, this next money-saving tax tip might help you if you're self-employed, if you do freelance work, or if you make money from an Etsy store selling things like dead mice dressed as horror movie characters. Hey, you do you. No judgment, but also a little bit of judgment.

God bless the Brits. They're doing stuff. Full-time taxidermist and makes thousands of pounds selling dead mice. 713 sales, are you kidding me? That's 140 grand in sales on average. I just want to let you guys know. All right, next tax tip, defer your income. Now, obviously, your income is taxed in the year you receive it. So if you're able to defer any income until January 1st or later,

you'll save on this year's tax bill. Now, this won't be a good option for everyone, but if you're self-employed or a freelancer, you might be able to do this by waiting until the end of December to bill your clients. That way, you'll receive those payments at the beginning of next year. Another way you might be able to defer payments is if you're getting a year-end bonus,

and you can check to see if your company will allow you to defer that into next year. But before you try this as a last minute tax saving strategy, be sure to check to see whether or not that extra income will push you into a higher tax bracket next year. Defering your income only makes sense if you expect to be in the same tax bracket or an even lower one. This next tip is one of the most straightforward ways you can save on this year's taxes, and that is contribute more to your retirement accounts. Traditional 401ks and traditional IRAs are funded with pre-tax dollars, which means you can lower your tax bill this year by writing off your contribution. as a tax deduction.

But remember, since you're not paying taxes on the money you put into that traditional IRA this year, you'll pay taxes on that money and its growth when you take the money out in retirement. And who knows what the tax rates will look like by then? I'm going to assume higher than they are now. And that's why I recommend going with Roth 401ks and Roth IRAs. Pay taxes now and then forget about it. That was offensive to all people groups, not just the Italians. I feel like you really got to throw it away.

Forget about it. Get out of town. It out. You got it, dude. So it grows tax-free and you can withdraw a tax-free. However, there is no tax deduction for the Roth side, but I'll take eternal tax-free growth any day. Okay, the next money-saving tax tip is for everyone, but especially the boomers. So come in close, Gam Gam-Gam.

Come on, P-pop, turn up the hearing aid. Can you hear me? I can't talk any louder. Okay, ready? RMD's required minimum distributions. It's the minimum amount of money you need to take out of your retirement account each year to avoid avoid penalties. This applies to people 73-year-older with non-Rath IRA accounts, aka traditional accounts. We're talking traditional IRAs, SEP IRAs, 401Ks, 401Bs, and simple IRAs. If you don't

take your RMD by the IRS deadline of December 31st or you don't take out enough money, that mistake will now cost you a 25% excise tax on the amount you should have taken out. It used to be 50% before Secured 2.0 Act. So thanks, Secure 2.0 Act. My pleasure. All right, next tip. This one has to do with. the gift tax, which is the government's way of taxing you when you give money or property to other people. Now, I'm not a fan of this tax, but at least we have a gift tax exclusion, which is basically a certain amount the IRS lets you give per year without being taxed. And in 2024, the annual gift tax exclusion is $18,000 per person per recipient. So in a typical year, most people probably

don't need to worry about this. And if you do go over that amount, it's not a big deal. You just have to file a gift tax return and some of your gift could count toward your lifetime gift tax exemption. I know. Stay with me. Exclusions, exemptions. It's unnecessarily complicated, just like that peg game of Cracker Barrel. Looks simple, but very difficult. So not only do you get the annual gift tax exclusion, you also have a lifetime exemption of 13.61 million in 2024, and it's going up to 13.99 million in 2025. So when you give away more than 18 grand in a year, whatever the amount is when you watch this video, the excess spills over into that lifetime gift exemption. But that's such a high number that most of us won't need to worry about it,

And if you do, you're not watching me. You're probably working with like an estate planning attorney at that point. But for those of you who are extra generous or you're really trying to get your college to name the cafeteria after you, the fifth money-saving tax tip is use your gift tax exclusion. Now before we get to the next tip, I want to give you a non-tax tip for keeping your personal info away from spammers, scammers, and creepy stalkers. A great way to do that is by using DeleteMe, a sponsor of today's episode. Delete me fines and removes your info from hundreds of data broker websites that make money by selling your personal info. and they'll send you a report showing you exactly where they found and removed your data and how much time they've saved you.

And they've saved me 55 hours already, which is more time I can spend researching the tax code. And let me tell you, chapter 34 subchapter A real barn burner. I need more hobbies. Help protect yourself from the risks of online scams and data breaches with DeleteMe. And right now, you can get 20% off any of their plans by going to join DeleteMe.com slash George. Or click the link in the description. And before we get back to Tax Talk, let's have a little saving summit. If you're stashing cash for a used car, a down payment on a house, or a giant donation to your alma mater so you can get your name on the front of the practice field maintenance shed, your money should be working for you.

And for that, I recommend a high yield savings account like the one offered by Laurel Road, one of the sponsors of today's video. Right now, your account balance earns over 4% APY. Plus, there's no minimum balance required to open an account, your deposits are FDIC insured, and there's no hidden fees. And if you want to talk to a real human being, they've got you taken care of with your premium care team. Learn more by going to laurelroad.com slash George or click the link in the description. All right, back to the tax tips. The next way you might be able to save some money on your taxes, take advantage of deductions and credits. Deductions can reduce your amount of taxable income.

That's the front end. Credits can reduce the amount of tax due on the back end. Now, don't wait until April to look into these because you might want to make some money moves before the end of the year to take full advantage of them. One example, the property tax deduction. If you itemize, you can deduct the property taxes that you paid this. this year. But you might be able to save even more by prepaying next year's property tax. If you pay next year's property tax in full by December 31st of this year, you can write it off when you file your return. This could be a good option if your property taxes aren't already

included in your mortgage payment. But like a lot of these tips, you'll have to itemize deductions in order to do this, so make sure you'd actually be saving more by itemizing rather than taking the standard deduction. In a similar boat, you've got the mortgage interest deduction. If you're eligible for this, here's a simple year-end strategy to help you maximize it. Make your January mortgage payment before December 31st. That way, you can deduct the interest portion of your January payment, along with the rest of the interest you paid this year, on your next tax return. Again, this one applies to very few people, considering the standard deduction is the more popular choice for saving money. So crunch the numbers with your tax pro or your favorite app.

Another way you could save if you itemize is to make some last-minute charitable contributions. You know those bags full of clothes in the trunk of your car that you've been meaning to take to Goodwill for a few months now? Yeah, now's a good time. and make sure you keep a detailed list of your donations and always get a receipt or a letter from the organization that includes the date and estimated value of your gift. And if you're donating cash, be sure to keep that bank statement. Another potential money saver is the electric vehicle tax credit. This is offered to taxpayers who buy a qualified electric vehicle or a plug-in hybrid vehicle. You can get a credit of up to $7,500 if you buy a new EV and up to $4,000 if you buy a used one.

But there are some rules around this and not every vehicle qualifies. So make sure to do your research before you're run out and buy a Tesla. And no, I checked a power wheels Barbie Jeep does not count as an EV. Although technically is electric and a vehicle, so personal opinion, it should. But alas, another win for the patriarchy. Don't question it. Just roll with a tiny baby. And speaking of carbon cutting, if you've made any energy-efficient home upgrades in the past year, make sure you look into the residential clean energy credit and the energy-efficient home improvement credit.

Tim Allen been real quiet since that dropped. It's only been a second, but still, he hasn't responded. But remember, when it comes to credit, and deductions, make sure you're looking at the big picture before you make big financial decisions just to save some money on taxes. Don't be that dingus who buys a $60,000 electric car just to get a tax credit. You'd be better off just getting the Barbie Jeep and no tax credit. I want the Barbie Jeep. My daughter's getting that Barbie Jeep. She deserves it. But seriously, check the most recent tax rules from the IRS and crunch the numbers to see if it makes sense

for you and your tax situation. Okay, this next tip is one of my favorites. It's not about saving on taxes this year, but it can save you a ton later on in retirement. And that tip is, consider a Roth conversion. A Roth conversion is the process of transferring funds from a traditional retirement account, like a traditional 401k, 403B, an IRA, into a Roth account. The main reason you do this is to enjoy the tax advantages of a Roth IRA or a Roth 401k, because with a Roth, you'll get tax-free growth and tax-free withdrawals at retirement. Now, keep in mind, you'll have to have the cash on hand to pay the taxes due on the money you're converting. So why, While it may cost you this year, that Roth conversion could give your retirement savings a major boost over the long run.

Now, this is a big financial move that could have a serious impact on your tax situation and your investing strategy. So work with a financial advisor before you get the ball rolling on this. Which brings us to our final money-saving tax tip. Connect with a tax pro. If your taxes are complicated or you still have questions about your end tax planning, be sure to work with a Ramsey trusted tax pro. They can walk you through all the different ways to save money on your taxes, both now and in the future. Go to Ramsey Solutions.com slash tax pro or click the link in the description below.

And don't wait until April to do this. You need an expert in your corner now so you're 100% ready come tax time. And if you'll be filing taxes this year, which I hope is everyone, except for maybe a few criminals, keep watching this next video to see five tax myths broke people believe. Or click the link in the description below. Thanks for watching. See you next time.