Want Lower Taxes This Year?
Want to drop your tax bill? It’s possible! Don’t overpay on your taxes this year. Check out these helpful tips to make the most of the tax code and drop your bill down a notch!
Beef up your retirement savings
Fund a retirement account or two, or increase your contributions to them, and you can greatly improve your financial future while lowering your taxes, too. With traditional IRAs and 401(k)s, for example, contributions reduce your taxable income for the year, thereby shrinking your tax bill. Roth IRAs and Roth 401(k)s, meanwhile, accept post-tax contributions, so they won’t shrink your tax bill in 2015 — but if you follow the rules, your contributions can grow significantly over time and be withdrawn in retirement tax-free.
Take advantage of a health savings account if you can
Those with high-deductible health insurance plans are able to contribute money to a health savings account, which offers many tax benefits. The money you contribute is deducted from your taxable income, lowering your tax bill. Contributions can be spent on qualifying medical expenses tax-free, and unused amounts can be rolled over from year to year. The contribution limit in 2014 is $3,300 for individual coverage and $6,550 for those with family coverage.
Time your mutual fund investments wisely
If you’re planning to invest in a mutual fund close to the end of the year, beware. Funds typically distribute dividends in December, and their shares fall in value by the amount of the distribution. That’s fair for longtime shareholders, but if you buy before the distribution, you’ll be hit with a tax bill. Ask the fund company when the distribution is and then buy after it; you’ll avoid the tax and get a lower price to boot.
– via The Motley Fool
Two Great Tactics To Lower Your Tax Bill
With a few clever tricks in your pocket, you can make a dent in your tax bill this year and hopefully dread writing that check to Uncle Sam just a little bit less intensely. Let’s take a look at a few things you can do to lower your taxes this year!
Changing the amount withheld from your paycheck can help you decrease, if not eliminate, what you owe at tax time. An IRS calculator helps you figure how much to withhold and how much of your paycheck to keep.
Events during the year may also change your marital status or the exemptions, adjustments, deductions or credits you expect to claim on your tax return. You may need to give your employer a new IRS Form W-4 to change your withholding status or number of allowances.
Make your home energy-efficient.
Investing in lowering your home’s energy consumption may open up credits to in turn lower your overall tax bill.
Improvements qualifying for credits include devices to harness solar and wind energy, geothermal heat pumps and electricity-producing fuel cells. These credits often cover almost a third of the cost of installation. You can also credit up to $500 for more usual improvements such as insulation, exterior doors and windows and heating and cooling equipment.
– via The Fiscal Times
Have you got your taxes completely covered, or is there still work left to do? Got any clever tricks for dropping your tax bill?