22 February 2019

3 Tips for Saving Money This Tax Season


When it comes to taxes, money in your pocket is better than money in the pocket of the Internal Revenue Service. In order to save on your tax bill, it is helpful to be as informed as possible about the laws and the process. Here are some ways to reduce your bill this tax season.

Get All the Deductions That You Can

Deductions exist literally so you can save money. When there is a possible deduction that you can take but do not, you are giving away money to the IRS. You should read the instructions for the Schedule A closely to figure out the entire range of deductions that you can take. Study the tax laws in effect to see if it's possible to itemize your deductions and donations to charity. Even mileage that you drive on your car can help cut the amount that you owe in taxes. Consider everything that you do in your daily life and compare it against the list of allowable deductions to see what you can take.

Double Check Your W-4 Allowances

It is a fact of life that people grow older. Not only do your children grow, but your parents and other relatives can also age. As your children reach a certain age, they can no longer be claimed as dependents. Conversely, relatives for whom you care may be claimed as dependents. Double-checking your allowances can save you money on your taxes. In order to figure out what the tax implications are for changing dependents, you can always check out the IRS' withholding calculator.

Save for College and Retirement

The tax code encourages taxpayers to save money for various purposes by allowing certain contributions to be made from pre-tax dollars. For example, you can contribute to an individual retirement account from pre-tax dollars as well as 529 plans for your children's college education. This has the effect of building your savings and lowering the amount of taxes that you pay. Contributions that are made before December 31 count to reduce your tax burden in that particular year. As you get older, you can even make additional contributions to your retirement that can further reduce your tax burden.

While taxes are one of the two certainties in life, they can be managed to the extent that you are able. Proper planning and forethought can help reduce what you owe.


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