7 Ways to Save on your Taxes this Year

posted by Chris Valentine

Who doesn’t want a bigger tax refund? Now is the time to start thinking about your plan of attack for this year’s taxes. The devil might be in the details, but so are the savings! You just need to up your organization game a tiny bit. There are plenty of simple tips and adjustments you can take advantage of; all it takes is a little homework and proactivity.

Keep Medical Receipts

If you hold onto your receipts throughout the year, you’ll be able to easily deduct medical supplies and other expenses. Applicable expenses include doctor fees (including psychologists and chiropractors), crutches, guide dogs, breast pumps, ambulance rides, bandage purchases, lab tests, prescription drugs, and more. Make sure you’re well informed of the options available to you, and keep a record throughout the year of the medical costs you incur.

Up Your 401K

Within certain parameters, money that goes into a 401K or an IRA is tax deductible. Lowering your take-home sum and upping your retirement savings is an easy way to trim some fat on your taxes, while ensuring some extra cushion for later in life. Total win-win.

Drag Out Your Mortgage

Okay so technically, by keeping your home mortgage for as long as possible, you benefit—at least from a tax perspective. Mortgage interest payments are tax deductible, so the longer you’re able to maintain steady payments, the better off you are. However, you first have to weigh the potential tax benefits against the interest accruing on your home loan; it might be a wash anyway, but still smart to check it out.

Look to the Professionals

Sometimes investing a bit more in the tax filing process means getting a whole lot more back. Employing the services of a qualified tax professional can help you get the most out of your tax return. CPAs and tax firms have access to dedicated CPA tax preparation software designed to take the guesswork and headaches out of the equation. Professional advice and reliable programming will have you on your way to the most painless tax season yet, and the peace of mind is more than worth it.

Hug Some Trees

It might sound odd, but there are actually quite a few tax benefits to making your home more environmentally friendly. It’s meant to serve as a method of encouraging more earth-conscious actions, and it definitely works. A variety of energy efficient home improvements are eligible, including new windows and insulation, more efficient heating and cooling systems, and even some solar panels. It will take some extra research to make sure your specifics are covered, but well worth the potential credits.

Be Charitable

It’s no secret that charitable donations are tax deductible, so make the most of them! Not only will you save on your taxes, but you’ll get that warm fuzzy feeling that comes with generously giving to a worthy cause. Just be sure you keep track of the paper trails. Similarly, giving up to $13,000 per parent per child can also be considered a tax deductible “charitable” gift.

Preparation is Key

It never hurts to do some extra research while you have the time, before the pressure of deadlines start to set in. Not only will doing so save you strain and stress, you may very well benefit financially from your preparedness in the long run. You’ll be more likely to successfully file on time, therefore avoiding late penalties or rush fees.

Figure out exactly which forms and documents you need to have prepared in advance (your W2s, 1099s, prior tax returns, etc). Have your stocks, bonds, and receipts from the year handy. Determine your itemizations ahead of time, and be as specific as possible.

The sooner you take the reins and start thinking about this year’s taxes, the better! You’ll have the time and information necessary to be sure that you aren’t overpaying, not to mention you’ll feel completely unstoppable when it’s all said and done. And, when your friends start moaning and groaning about the impending doom of tax season, you’ll know exactly where to send them for their own research, and who to recommend for their filing software.

You may also like