Things To Do This Year To Help Decrease Your Tax Liability Next Year
How do wealthy individuals end up paying so little in taxes? They've certainly got a personal income tax preparer guiding their expenses throughout the year and they're going to hire expensive evaluators and assistance when it comes time to actually file. Doing that much isn't practical, affordable, or necessary for most households, but you can take a page out of their book: plan ahead during the year, and you're going to see savings at tax time.
Donate More
Giving to charity is one of the most classic ways to reduce what you pay the government. There are a number of different ways to donate: you can give a flat-out donation, which will turn up as a deduction of that amount on your return. Alternatively, you can give goods. This is a bit more tricky as you'll need to have some way to determine the value. Whatever you end up doing, make sure you obtain an official receipt. Without that, it'll be hard to explain those deductions if the IRS does choose to audit you.
Contribute To Your IRA
The amount that can be put into a retirement account is capped at an annual limit. But up to that limit, assuming you're using a regular IRA rather than the differently structured Roth, your deposits directly reduce the amount of your taxable income. If you're not sure about the structure of your accounts, it's wise to sit down with your financial planner and talk about the best way to work the deposits.
Travel Expenses
If you're going out of town for business, you can in some cases claim deductions. This isn't guaranteed, and you can't always claim all of it. If you're planning a business trip to help assist with offsetting costs, talk to your income tax preparer to find out what you can do to maximize the amount that can be written off.
Look At What You Paid
One of the most complex and yet rewarding things you can do to adjust what you owe next year is to look at what you had to pay this year and evaluate whether you might need to adjust your withholding amount. The goal of withholding is to have you paying the government the exact right amount. You don't want to have a refund because the government doesn't give you any interest on what they're holding. But at the same time, if you're ending up stuck with a huge bill, you want to adjust your withholding up so you don't get stuck.
If you're curious about more specific information that can help your particular situation, explore the options. Whether you live in Virginia or California, offices near you can evaluate what you specifically owe and spot what you might claim.
Donate More
Giving to charity is one of the most classic ways to reduce what you pay the government. There are a number of different ways to donate: you can give a flat-out donation, which will turn up as a deduction of that amount on your return. Alternatively, you can give goods. This is a bit more tricky as you'll need to have some way to determine the value. Whatever you end up doing, make sure you obtain an official receipt. Without that, it'll be hard to explain those deductions if the IRS does choose to audit you.
Contribute To Your IRA
The amount that can be put into a retirement account is capped at an annual limit. But up to that limit, assuming you're using a regular IRA rather than the differently structured Roth, your deposits directly reduce the amount of your taxable income. If you're not sure about the structure of your accounts, it's wise to sit down with your financial planner and talk about the best way to work the deposits.
Travel Expenses
If you're going out of town for business, you can in some cases claim deductions. This isn't guaranteed, and you can't always claim all of it. If you're planning a business trip to help assist with offsetting costs, talk to your income tax preparer to find out what you can do to maximize the amount that can be written off.
Look At What You Paid
One of the most complex and yet rewarding things you can do to adjust what you owe next year is to look at what you had to pay this year and evaluate whether you might need to adjust your withholding amount. The goal of withholding is to have you paying the government the exact right amount. You don't want to have a refund because the government doesn't give you any interest on what they're holding. But at the same time, if you're ending up stuck with a huge bill, you want to adjust your withholding up so you don't get stuck.
If you're curious about more specific information that can help your particular situation, explore the options. Whether you live in Virginia or California, offices near you can evaluate what you specifically owe and spot what you might claim.
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