Reduce Your Tax Bill Now!
Many people were disappointed with their tax returns this year. Though the new tax laws didn’t seem like a huge change, there are some confusing and complex changes that affected many. There are plenty of ways to reduce your tax bill throughout the year. Ranging from small steps to large acts, we’ve compiled a list of helpful hints to potentially reduce your taxes and increase your return next year and years to come!
- Contribute to Retirement Accounts.Consider Contributing to an HSA
A Health Savings Account, or HSA, can be useful for those with high-deductible health insurance plans. Like the 401(k), 403(b), and IRA, the contributions can be pre-tax if they’re made by payroll deduction. Or you can deduct them from your tax bill once you begin filing. Either way, you have the potential to reduce your tax bill by a lot if you contribute enough.
- Buy a House
Are you considering buying a home? If you can afford it, you can deduct a lot in the next tax year. Mortgage interest up to $750k, property taxes, and interest on home equity loans or lines of credit can all be deducted when filing for that tax year. You will have to itemize everything in order to take these deductions so remember to save statements and receipts.
- Harvest Your Losses
If you have capital gains during the year, trying offsetting the tax liability by selling the losing investments. By selling these at loss, you’ll reduce the capital gains tax. Remember, only do this to taxable investments, not the investments in your 401(k) or IRA. Don’t forget, if you buy the stock back within 30 days, the IRS can take back your deduction. Never let lowering your tax bill get in the way of smart investing.
- Contribute to Charity
You probably know that charitable contributions are tax-deductible, but do you know that checks aren’t the only way to give? Toys, clothes, food, or any other household needs can be donated. Make sure to keep the receipts to itemize each deduction. Remember, charity is something to do because you want to, not a means to avoid or reduce taxes.
- Appeal your Property Taxes
Did you know you can appeal your property tax amount? If you believe your home assessment is too high, decide if an appeal is worth your time. You’ll have to be quick because most towns allow about 30 days to appeal. First, make sure the information such as bathrooms, bedroom, square footage, etc. are correct. On rare occasion
You’ll need to get a comparable of similar homes in your area, which you can get from a realtor. Once you have your research you can present your case. Depending on the original amount and what you settle on, the reduction in your tax bill can be significant. Tread lightly because the town can decide that your home is more valuable than what was originally assessed.
- Use a Professional for Tax Preparation
Using a professional to prepare your tax can be beneficial depending on your tax situation. If you have a complex situation or just don’t understand how the tax deduction world works, using a professional such as a CPA, can potentially save you a lot of money. CPAs are required to follow a certain ethical code and need continuing education, so they should always be up to date on the latest tax law changes and ways to save money.
Reducing your tax bill can be tedious. You’ll have to track everything, even the small items. You have to decide if it’s worth the time and effort or stick to the standard deduction. Speak to a tax professional for advice and the best option for you. If you feel like most of us, very confused by taxes, then consider speaking with a CPA. Making sure your taxes align with your investments and retirement planning is necessary in order to ensure you get the most out of your money. Give us a call at 1.800.467.8152 or email at firstname.lastname@example.org to speak with our on-site CPA and financial professionals to coordinate your finances.