https://visiontaxplanning.com/wp-content/uploads/2022/01/3.png 850 2000 Website Admin https://visiontaxplanning.com/wp-content/uploads/2019/12/Vision-Tax-Planning-color-WEB-1-300x138.png Website Admin2022-01-07 16:33:152022-02-24 16:42:3919 Ways To Save On Your Taxes - Part Two
19 Ways To Save On Your Taxes – Part Two
And we’re back. If you missed part one of 19 Ways to Save on Your Taxes, be sure to check it out here because that one is full of gripping details on how to save taxes. If you’re already up to speed, hold on to your hat but it’s about to get even more exciting, as exciting as taxes can be anyway…
- Give it away, give it away, give it away, give it away now… Charitable giving is another great way to reduce your tax, if you can itemize. Track all of it though, and be thoughtful. If you are going to make major gifts, consider lumping them all into one year to maximize your deduction.
- Save into your state’s 529 plan This does not provide a federal tax break, but in most states it will reduce your state tax burden. Be sure to work with a financial planner who can help evaluate options because if the investments are only mediocre, your meager tax break may come at the cost of your growth. a.
- Pay your January mortgage payment early, before 12/31. Yup, pay it early. It’s that much more interest that could be deductible if you can itemize.
- Get your medical services in and paid before 12/31 The more medical expenses you can get paid in one year, the better your odds of being able to itemize.
- Maximize side-hustle deductions Gig work and consulting is a thing these days, and while there are pluses and minuses to gig work, being able to offset income with expenses is a great plus. Work with a tax pro that can help make sure you are taking advantage of every possible deductible expense.
- Work from home, maximize the home office deduction If you are a W2 employee, this isn’t for you. But if you are 1099, a consultant, self-employed, this is for you. Carve out a space in your home solely devoted to your work. There are two methods to taking this deduction, so be sure to work with a pro who can help determine which is the better method for you.
- Earned income tax credit (EITC) is a credit given to low-to-moderate income households based on family size, and is different for everyone. Any good software or tax pro can help determine what you should get. Caution, the IRS scrutinizes this credit and it may slow down your refund.
- Go to college Education credits like the American Opportunity Credit (AOTC) and the Lifetime Learning Credit (LLC) both reduce the amount of tax owed on your return. There are very specific rules for claiming these credits so be sure you either understand the rules, or work with a pro.
- Get married I wouldn’t suggest you get married just for the tax benefits, but there can be tax benefits, especially for single income households.
- Have another baby Again, don’t do it just for the tax money, but you only get the child tax credit if you have children. And right now, the government is handing out child tax credit money hand over fist, so if a family is part of the deal, get your credits.
This is obviously a lengthy list, but certainly not all-inclusive, nor will all of these apply to everyone. Any good tax software or tax pro can help you maximize all that apply. For more information on when you should hire a tax pro, check out this article.
Would you like to learn if these apply to you? Contact us at 888-655-9561.
Will Ellis CFP, Tax Advisor
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