Regardless of the current season, everyone knows that tax-time is never too far off in the future. As inconvenient and time consuming as filing and paying taxes may be, the IRS-imposed penalties for failure to do so are even less pleasant. Fortunately, there are some methods that may be able to potentially save you money on your next tax bill. Please keep in mind, however, that the following tips are merely suggestions and are not intended to serve as substitutes for advice from your experienced tax planner and financial advisor.
Money-Saving Tax Tips
Pay Your Real Estate Taxes Early:
In addition to making you appear responsible and credit-worthy, paying your real estate taxes early is one way to help lower your tax bill. If you are responsible for paying your own real estate tax, making payments due at the beginning of the New Year on or before December 31st of the current year will allow you to get the tax deductions from these payments a year earlier in most cases.
Make Your Mortgage Payment Early:
By Jan 1st of the New Year to be exact. Doing this means that your lender will get your payment at the start of the New Year, but won’t report it for the previous (or current as the case may be) year, which means that you will be able to add the amount to your yearly deduction sooner.
Contribute to Your Retirement Plan:
This is a smart financial move to make in any situation, but making extra contributions to your 401k or IRA—up to $14,000, $18,000 for those 50 and older, can in extra tax-bill deductions.
Make Big Gifts Now:
You can reduce, postpone, and in some cases avoid paying your estate tax by making gifts of up to (but not to exceed) $12,000 (more in some cases) by the end of the fiscal year.
Calculate Your Miscellaneous and Medical Expenses:
You may not realize that some of your medical-related expenses may be eligible for tax deductions. Specifically, medical expenses that exceed 7.5% of your AGI (Adjusted Gross Income) are eligible for deduction. In the case of other miscellaneous, non-medical expenses, those that exceed 2% of your AGI are usually eligible for a deduction on your tax bill.
Take The Child Tax Credit:
If your income is under $110,000 a year, or $75,000 for those who are single, and you have one or more children under seventeen living with you, you may be able to claim a credit for 20-35 percent of your annual child care expenses.
There are many ways to potentially reduce your tax bill and your personal certified financial planner and tax advisor can help you examine your budget and tax records to better determine how you can use these benefits, credits, and exemptions to your advantage this tax season.