The last thing any taxpayer wants to hear is that they owe the IRS. Thankfully, you can avoid an unpleasant tax time surprise with a little planning. Here are 5 tips that can lower your tax bill.
1 Maximize Retirement Fund Contributions
Maximizing your contributions is one of the best ways to save money on taxes and plan for your retirement. When you contribute to your traditional or Roth IRA before April 15, 2019, you can beef up your retirement savings and lower your tax bill with deductible contributions. For 2018, the maximum IRA contribution you can make is $5,500 ($6,500 if you are age 50 or older by the end of the year).
2 Itemize Your Tax Deductions
While it can be easier to take the standard deduction, itemizing is worth the effort if your expenses add up to more than the 2018 standard deduction: $12,000 for single filers and $24,000 for married couples filing jointly. With ezTaxReturn’s online tax software, it’s quick and easy to compare the standard deduction and itemized deductions to see which is right for you.
3 File and Pay on Time to Avoid Costly Penalties
When you use our online tax software, you can complete your tax return and file it electronically to get your taxes to the IRS as quickly as possible. If you do file and pay late, the IRS can hit you with a late-filing penalty of 5 percent per month of the tax owed and a late-payment penalty of 0.5 percent a month of the tax still due. The maximum late filing and late-payment penalty tops out at 25 percent. Requesting an extension can help you avoid late filing penalties and fees if you file by the extended deadline. However, it does not give you more time to pay.
4 Review Your Withholdings
Now that the tax laws have changed, it’s a good idea to review your withholding. To figure out how many allowances you need to claim, consider your spouse’s income and any credits and deductions you take besides your income. If your household income comes mostly from you and your spouse’s paycheck, the IRS withholding calculator can help you estimate your withholding.
5 Pre-pay 2019 Bills in 2018
If you itemize, you can find more deductions in 2018 by making an extra mortgage payment or taking advantage of the medical expenses deduction before it increases from 7.5 percent to 10 percent in 2019. If you’re close to the threshold for itemizing deductions, it may help to fit in a visit to the dentist or doctor before year-end. Paying outstanding medical expenses can also help get you over the threshold.
If you want the biggest possible tax refund as quickly as possible, ezTaxReturn.com is the answer. With almost 20 years of online filing and 99 percent customer satisfaction, you can count on our expertise.
