Ready for tax season? When you’re trying to make the most out of your money, the last thing you want is for the government to take too much. If you’re self-employed and have medical expenses, an investment property, or any other special deductions, it’s important to get them on your taxes in order to save money. In fact, simple deductions that may have slipped through the cracks last year can save you hundreds of dollars on your return. If you’re due a refund, this is the easiest way to get some cash fast. Filing online also gives you assistance in case you run into questions or problems while filing your taxes.
Before you file, check out this list of tricks for cutting your tax bill. While you may not be able to use all of them, just about everyone can take some of the below-mentioned tips to reduce their tax liabilities. Read on.
Make Tweaks to Your W-4
Increasing your withholding means you’re giving the government an interest-free loan, which could mean some extra money in your pocket in the future. On the other hand, if you received a huge refund last time, it makes sense to reduce your withholding, so you have more of your paycheck coming to you. The New Year offers the opportunity for a fresh start, so consider tweaking your W-4.
Put More Money in Our 401(k)
If you’re not stashing money in a 401(k) each year, you’re missing out on the power of tax-deferred growth. Most 401(k)s allow you to contribute up to $19,500 in 2021 and $20,500 in 2022. And if that weren’t enough, your employer might match some or all of your contribution. Keep in mind that the money you put in your 401(k) will grow tax-free until retirement, so make sure to increase your 401(k) proceeds if you can to save on tax.
Start Contributing to An IRA
An IRA can be a superb way to save money and reduce your long-term taxable income – especially if you open a traditional IRA. Traditional IRAs are funded with pretax dollars, much like 401(k)s and other workplace retirement plans. Money inside the account grows tax-deferred, meaning you don’t pay tax on that money or the investment gains inside the account until you start taking distributions.
Donate Money to Different Charitable Causes
Donations are an important way to give back to your community, and they can also help you save a few bucks on your taxes. And it’s not just cash-based donations that count. If you own products that are in good condition, you might be able to score some write-offs there as well. And after you make the donation — keep that receipt! While it seems like common sense, many people forget to hang onto those slips of paper, so it’s best that you don’t take any chances.
