We’re all looking forward to a prosperous new year, and one way to look forward to the new year is with a tax return.
Whether you’re looking for ways to save on your taxes this year or you’ve just received your tax return and want to make sure you’re saving money, we’ve got the tips for you.
We’re talking about finding ways to save on your taxes, so you can enjoy your post-tax return extra cash. Here are the top 10 tax tips from tax planners to help you save more money on taxes.
Table of Contents
1. Review Your Withholding
This involves reviewing the Federal and state tax amounts taken from your paycheck every period. To start, calculate your yearly income tax rate so you can compare it to your current withholding.
If there is a difference, then you can adjust your withholding for the future. It’s best if you can consult tax professionals like Anderson Bradshaw tax consulting and they will surely help you calculate the optimal withholding amounts for you.
2. Know What Deductions You Can Take
One of the most common deductions you can take are deductions for retirement contributions, such as IRA contributions, 401(k) contributions, or other similar savings plans. You can also deduct medical expenses and interest paid on student loans, charitable donations, and certain tax credits.
With so many deductions, keeping good records and a detailed record of all deductible expenses is important. It is also important to make sure you are eligible for each deduction and fill out the appropriate forms.
3. Donate to Charity
This could be a single donation spread across an entire year or a monthly donation. Additionally, individuals can make in-kind donations of items such as clothes or furniture and those donations may be eligible to be claimed as a tax deduction.
Consider opening a donor-advised fund account at a financial institution, such as a bank or a brokerage, for larger donations. This will give donors the possibility to spread their donations over time in smaller amounts while still receiving their tax relief.
4. Take Advantage of Credits
Tax credits are typically split into two categories: refundable and non-refundable credits. Refundable credits can result in a refund if the amount of the credit exceeds the amount of taxes you owe. Non-refundable credits can only reduce the amount of taxes you owe to zero.
Look for tax credits that relate to your livelihood, such as health care, education, energy efficiency, or retirement planning. Finally, filing your taxes on time and accurately is essential to securing the credits you deserve.
5. Insure Your Home Office
First, speak with your insurance provider and inquire about any discounts they offer. Next, research coverage plans that specifically address home office needs. Many insurers offer specialized plans that are tailored to the working-from-home lifestyle.
Consider your business activities and any potential risks to determine which coverage is best for you. Finally, take advantage of any tax deductions related to home office insurance. Most providers will outline the deductions you can claim on your tax return, so don’t forget to take full advantage.
6. Get Help on Retirement Savings
One of the easiest ways to save money on your tax return is to contribute to a Traditional Individual Retirement Account (IRA). Contribution limits for a Traditional IRA can be as high as $6000 for 2019.
Contributing to a Roth IRA is another option; limits can be as high as $7000 for 2019. If you already have an IRA, consider discussing contributions and investment options with a financial advisor.
7. Check for Errors
You can check over your return yourself, or with assistance from a tax consulting professional or other tax services. It is important to double-check details such as income amounts, tax credits or deductions you are eligible for, and any other information relevant to your tax return.
Making sure you are accurate in these details can save you money in the long run. Additionally, you can double-check that you have included all the necessary documents and important tax forms related to your tax filing.
8. Manage Your Investments
The first step to managing your investments is to create and follow a budget. Decide how much money you will be able to spend on investments and then choose investments that are in line with your budget and risk tolerance.
It’s also important to remember to diversify your investments to limit your risk. When choosing investments, try to pick ones that offer tax breaks. Keep track of your investments so you understand where your money is going.
9. Start Saving Early
Start with a budget and set a portion of your paycheck aside for taxes each month. Consider using a tax-advantaged account such as an IRA to save money for taxes, as such accounts may offer additional savings opportunities.
Save records of any expenses related to taxes and store them in a separate folder to easily access the necessary information when filing your return. Tax season can be stressful enough, save yourself some money and start saving now!
10. Plan For Audits
Start by organizing information related to any deductions or credits you are taking; this will help you respond quickly when the Internal Revenue Service calls for backup documents. Make sure you save all your receipts, utility bills, bank statements, etc.
It is best to make digital copies too. It is also important to keep track of your income sources and any additional earnings for the year. Make sure you have all the same information that was used on your tax forms to respond to any audits.
Save Money With the Help of Tax Planners Today
By following the tips provided by tax planners, you can significantly reduce your tax bill and increase the amount you save. Taking the time to understand the different deductions available to you can drastically reduce the tax you pay, so make sure to use all of the deductions you are eligible for.
Don’t forget to speak to a tax planner for further assistance. Start saving money on your tax return now!
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