Tax season is upon us once again. If you’re dreading writing a big check to Uncle Sam, we’re here to help.
We have some tips and tricks to help you lower your tax liability for the year. Maximizing your tax breaks could allow you to keep more of your hard-earned money.
Let’s dive into our top ways to lower your tax liability in the upcoming year.
1. Maximizing Your Charitable Donations
Maximizing your charitable donations is one of the best ways to lower your tax liability for the year. Tax deductions on charitable donations can significantly reduce your tax burden. This allows you to keep more of your hard-earned money and invest it elsewhere.
Before donating, make sure that the charity you choose is registered with the IRS. Larger donations of money and property may need more paperwork, so it is important to find out what is needed ahead of time.
2. Deductions on Your Tax Return
Taxpayers can lower their tax liability for the year by taking advantage of deductions on their tax returns. Taxpayers should ensure they are claiming any business expenses or professional fees necessary.
It is also important to be aware of certain deductions that are limited or unavailable depending on the taxpayer’s filing status or income level. Taxpayers should speak to a tax professional to discuss their individual situation and maximize their deductions.
3. Tax-Sheltered Investment Accounts
Tax-sheltered investment accounts are a great way to lower your tax liability for the year. These accounts are designed to help you save money on taxes while making investments.
When you put money into a tax-sheltered investment account, you can deduct the same amount from your taxes as the amount you put into the account. This can help to significantly lower your tax obligations for the year.
4. Rebalancing Your Retirement Portfolio
Rebalancing your retirement portfolio can be an effective way to decrease your taxes for the year. Rebalancing might save taxes if you frequently review and change your retirement portfolio.
When you rebalance your retirement portfolio, you can find assets that have been appreciated. This can be sold at a profit, triggering a capital gains tax.
If you’re really struggling with your tax, you may have a settlement amount with the IRS to lower your tax legally.
5. Credits for Self-Employed Individuals
Credits for self-employed individuals are a great way to lower your tax liability for the year. The best way is to take advantage of small business credits, like the Small Business Health Care Tax Credit (SBHCTC).
This credit can help eligible self-employed individuals and small employers cover the cost of their health insurance premiums up to a certain extent.
6. Home Office Deductions
One of the ways to lower your tax liability for the year is to take advantage of home office deductions. This deduction can be applied to expenses associated with a dedicated workspace within your home, such as the cost of utilities, maintenance, repairs, insurance, and other necessary costs associated with a home office.
Legally Lower Your Tax Liability for the Year
By knowing the available deductions, credits, and exemptions for the year, you can lower your tax liability. Leverage tax planning to take advantage of the opportunities to save and consult a financial adviser for additional assistance. Take action now to ensure your tax liability is as low as possible.
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