By: Ryan Moran, CFA, CPA, CFP® It is that time of year. Again. Tax season. A strategic approach can help reduce tax liability and even increase potential refunds. However, navigating the complexities of the tax code can be overwhelming, and missing out on valuable credits or deductions could mean leaving money on the table. That’s why working with a qualified tax professional—such as an Enrolled Agent (EA) or Certified Public Accountant (CPA)—alongside your financial advisor is essential. A tax professional can ensure you’re taking full advantage of available credits and deductions while aligning your tax strategy with your long-term financial goals. In this article, we’ve highlighted some of the most common tax credits and deductions that are available for 2024. The hyperlinks within the article will direct you to the relevant IRS source. Feel free to share this article with your tax professional. If you don’t have one, give us a call, and we’d be happy to recommend one. Tax credits are dollar-for-dollar reductions in your total tax liability, and in some cases, may increase your refund. The Earned Income Credit is available if your income is low and/or you have children. The Child Tax Credit is up to $2,000 per child under age 17 for married couples making less than $400,000 or single taxpayers making less than $200,000. If you pay for someone to care for your child or dependent, you may be eligible for the Child and Dependent Care Credit . This applies to children under age 13 and other dependents who are unable to care for themselves and live with you for more than half the year. The credit is up to 35% of qualifying expenses, to a maximum of $3,000 for one or $6,000 for two or more children or dependents. A credit is also available for costs associated with adopting a child. There are two education credit programs available for eligible post-high school tuition. The first education-related credit is the American Opportunity Tax Credit , which offers a maximum annual credit of $2,500 to offset tuition for an eligible educational institution, often reported to you on Form 1098T. Students are eligible for four years of this tax credit. The second education-related credit is the Lifetime Learning Credit , worth up to 20% of the first $10,000 of qualified post-high school education expenses, up to $2,000. Students do not need to be pursuing a degree or other credentials, meaning online classes and job improvement courses may be eligible. The Energy Efficient Home Improvement Credit can help homeowners offset qualifying improvement expenses for exterior doors, windows, air conditioners, water heaters, and furnaces. Similarly, the Residential Clean Energy Credit is for solar or wind generation, solar water heaters, and battery storage. If you purchased a new or used clean vehicle —such as an electric car—you may be eligible for a credit of up to $7,500. There is a credit for making contributions to an IRA or employer retirement plan. The Retirement Savings Contributions Credit is 50%, 20%, or 10% of your contributions, but phases out completely once your income is above $76,500 if married or $38,250 if single. Students and dependents are not eligible. The Premium Tax Credit helps offset the premiums of purchasing health insurance through the Health Insurance Marketplace. This is particularly helpful for families in early retirement, before being eligible for Medicare. The amount of this credit is significant and can be received in advance to lower monthly insurance premiums. The Foreign Tax Credit offsets taxes paid to a foreign country on income also subject to US tax. This is more common than you may think. Frequently, international investments, through structures like mutual funds and ETFs, pay this tax and report it to you via the Form 1099. If you paid more than $10,453 Social Security tax in 2024, per person, any excess is refunded via a tax credit. This may happen if you made more than $168,600 last year, maybe spread over multiple employers. Although not a credit, interest income received from US Treasury bonds is exempt from state income taxes. This percentage is frequently reported by mutual funds and ETFs, but you need to look it up yourself. It may not be reported to you on the Form 1099. And you need to make an adjustment on your state tax filings. Speaking of state tax filings, if you have investments in tax exempt municipal bonds or funds, make sure you adjust for any interest received from in-state issuers. That interest may also be exempt from state tax. Wisconsin, for example, offers a $300 credit for property taxes or rent paid. Check with your state for similar credits. Tax deductions are different from tax credits-they reduce your taxable income. The 2017 Tax Cuts and Jobs Act (TCJA) removed most tax deductions available to individuals, particularly some “itemized deductions” which were replaced with a much larger “standard deduction.” But some options are still available. Contributions to employer-sponsored retirement accounts, such as a 401(k), are considered tax deductions, along with Traditional IRAs. Highland Investment Advisors can guide you on the contribution limits to these types of accounts. If your taxable investment portfolio incurred capital losses , you can deduct up to $3,000 from your income after offsetting any capital gains you may have realized. Additional losses can be used in subsequent years. If you sold your home for a profit, up to $500,000 of gains are excluded from tax, if married, or $250,000 if single. Contributions to Health Savings Accounts (“HSAs”) are particularly powerful. For 2024, contributions up to $8,300 are tax deductible for a family. Earnings within the account are tax exempt. So are withdrawals used for eligible medical expenses. HSAs are “triple tax-exempt.” Teachers can deduct up to $300 for certain unreimbursed classroom expenses. Wisconsin also offers a deduction from your taxable income for contributions to Wisconsin’s 529 College Savings plan. For 2024, the deduction is up to $5,000 of contributions per beneficiary. For 2025, the deduction increases to $5,130 per beneficiary. Most of these tax credits have limitations which may reduce the amount you are eligible for if your income exceeds certain amounts. All of these tax credits have a variety of eligibility requirements which need to be met. All content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. Nor is it intended to be a projection of current or future performance or indication or future results. Opinions expressed herein are solely those of Highland Investment Advisors, LLC and our editorial staff. The information contained in this material has been derived from sources believed to be reliable but is not guaranteed as to accuracy and completeness and does not purport to be a complete analysis of the materials discussed. All information and ideas should be discussed in detail with your individual adviser prior to implementation. Advisory services are offered by Highland Investment Advisors, LLC a SEC Investment Advisor.