It almost that time of year again – not Christmas, or winter, but tax season. This means that millions of those working and living in the U.S. will be scrambling to find a way to make sure they don’t need to pay Uncle Sam more than his fair share.
Let’s face it, the U.S. was founded by people who didn’t want to pay what they thought were unreasonable taxes and that is one tradition which continues to this day. As such, it doesn’t matter if you are looking for guidance on Small Business Tax Preparation or for your personal taxes you want to save as much money as possible.
But even with the new tax rules, saving money in the coming tax season doesn’t need to be something that hard to understand. Just follow these tips and you’ll end up with more money in your pocket come April 15th.
- Don’t Delay
Yes, we are talking about taxes, and no one likes to deal with them, but the reality is that the longer you wait to prepare your filings the harder it is to get them done by the deadline. This is especially true if you rely on itemized deductions as you will need to double check your tax filings to make sure everything is correct.
As such, you want to start preparing your taxes as soon as possible. Not only will this give you more time to plan if you have to pay but it will also give you more time to look for opportunities to claw back some of your hard-earned money from the clutches of the government.
Another thing to think about is that the sooner you file your taxes, the soon you can receive your rebate. As such, don’t delay and start getting everything ready to prepare your taxes today.
- Make the Most of Your IRA
These retirement savings accounts are a great way to minimize your tax bill as the government effectively lets you earn money tax-freeif you pledge not to use it until your retirement. It doesn’t matter if you are self-employed or work for a big company, you want to make the most of this deduction as it not only reduces your taxable earnings it will also help you to get some money back at the end of the year.
Another thing to know about IRAs is that they are no longer strictly for retirement. In fact, the rules have been loosened to allow withdraws to pay for medical expenses, college tuition, and even buying your first home. As such, you can use the money not only to save on your taxes but also to help cover the qualified costs in the future.
- Open a Health Savings Account
The good news for people who have Health Savings Accounts (HSA) is that the Tax Cuts and
Jobs Act of 2017 left these deductions largely untouched. The only difference is that the contribution limits which were increased from $3,400 in 2017 to $3,450 in 2018 for individuals and from $6,800 in 2017 to $6,850 for families. Note the law also allows those over 55 to make an additional contribution of $1,000 per year.
This is important as these deductions are all pre-tax. Like your IRA an HSA is a great way to save on your taxes while ensuring you have the money needed to pay for life’s necessities – in this case, the cost of healthcare.
For those who are getting their HSA through there employer, they might want to check the fine print and many employers will offer a contribution and this is a great way to get more tax-free money to cover expenses. So, if you have an HSA, you want to take full advantage to cut down your tax bill.
- Don’t Forget Your Student Loans
While it is nearly impossible to discharge your student loans through bankruptcy, the IRS does allow for up to $2,500 of interest payments on these loans to be deducted from your taxes. This might not seem like a lot, but every bit helps when we are talking about saving money on taxes.
One thing to remember when claiming this deduction is that meet the criteria set out by the IRS. This means that you will need to file as single and not married and that your income is under $70,000. Note there are other criteria for determining whether you can qualify for this deduction but for new graduates this is a great tool to help improve their personal finances.
April 15th is not as far away as it seems, so use these tips to help you save money in the coming tax season.