Looking to optimize your finances? Here are 5 ways to utilize tax savings opportunities:
- Life Changes – Major changes to your life, such as a new job, marriage, adoption or the birth of a child. These not only change your life, but also affect how you file your taxes and what deductions you can utilize. Remember to update your Form W-4 to adjust your tax withholding for your new situation. An increase to your family and or income will most probably make it necessary to change your current withholding.
- Uncommon Deductions – Those life changes may also bring with them expenses that you may be able to deduct job search costs, student loan interest or day care. Even if you did not have any of these major life changes, you should evaluate eligible deductions because Congress and the IRS frequently add or adjustment tax provisions.
- Decrease your Taxable Income – There are certain credits and deductions that applied directly to your income can reduce your total tax due. Some of these can be related to education, like any tuition you paid for yourself or a member of your household or interest on student loans. If you are a business owner, you may be able to plan your major business expenses to optimize their tax benefits.
- Take Advantage of Retirement Plans – Contributions to retirement plans can be made pre-tax. If your employer has a 401K you can contribute up $18,000 plus a potential matching contribution. If you have an IRA, you can deduct $5,500 worth of contributions. This not only helps you save on your taxes for 2017 but helps you secure your future.
- Make estimated tax payments – Do you have income this year but it is not from a traditional job where you get a W2? If yes, there may not have been any withholdings taken from it, might lead to penalties and interest charges. Whether, you are self-employed, or freelance make sure know your tax obligation.
With just a little forethought of the possible tax implications you can find ways to achieve tax savings. Keep in mind that there are some limits and qualifications to the deductions we mentioned, make sure you fully understand your tax obligations before you file that return and you can always contact us!