The information in this article is up to date for tax year 2023 (returns filed in 2024).
Hefty tax bill? Let us leave you a few tips…
Nobody likes a high bill…whether it’s your cable or tax bill! You may not be able to avoid paying the IRS, but there are ways to lower your tax liability. Let us show you a few ways.
1. It’s never too late to plan ahead…contribute to your retirement plan!
Contributions to a tax deferred traditional individual retirement arrangement (IRA) account lowers your taxable income, so you’ll owe less to the IRS. Regardless of standard deduction or itemized deductions, you’ll save money on your tax bill right away.
Note: Traditional IRAs are tax-deferred and not exempt. This means you’ll still owe taxes to the IRS but generally at retirement when your taxable income will be much lower. IRA contributions are allowed until the tax deadline every year which is generally around mid-April.
2. Invest in your health to decrease your taxable income.
Enroll in a flexible spending account (FSA) through your employer. Because health is wealth! This allows you to put money away for medical expenses and dependent care. FSAs are “use it or lose it” – so be sure to use your benefits before they expire at the end of each year.
Note: FSAs paycheck contributions are tax-exempt.
3. Do good, save good!
You can save money on your taxes by adding charity donations as write offs. This includes donations of money, clothes, and other essential items. If you’ve supported a charity through volunteer work, you can even claim expenses for travel and administrative costs. Yes, it saves to do greater good! It’s a win-win!
Note: You must itemize to deduct your charitable donations.
4. Bundle your deductions.
You can bundle your deductions by putting two years of contributions into one year. Or you can itemize deductions every other year. Bundling your deductions will make more of a difference with smaller deductions being accumulated. For example, instead of donating $5,000 to charity annually, you can give $10,000 every two years.
5. It can get expensive to be your own boss.
If you’re self-employed or an independent contractor, you can save money on your taxes by knowing what is tax deductible. Eligible expenses include office supplies, the home office space deduction, utilities and insurance. Business driving expenses including mileage, parking and tolls can also be deducted.
Need help lowering your tax bill? File with ezTaxReturn.com today and let us help you get the tax breaks you deserve.
The articles and content published on this blog are provided for informational purposes only. The information presented is not intended to be, and should not be taken as, legal, financial, or professional advice. Readers are advised to seek appropriate professional guidance and conduct their own due diligence before making any decisions based on the information provided.
