Tax Saving Tips for the End of the Year

We cannot escape paying taxes.The amount of taxes subtracted from your income is dependent on how much money made, deductions, etc. We all need to strategize in order to get big savings on our taxes. Here are 7 top tax saving tips that will lower your tax bill this year.

Top 7 Tax Saving Tips just for you:

DO YOUR TAXES YOURSELF

Although this does not directly affect the amount of taxes you pay, it reduces unnecessary tax related expense. You don’t need a Certified Public Accounting (CPA) firm or tax preparation services elsewhere. There are several online software such as TurboTax which instruct you on how to do your taxes on your own.

FUND RETIREMENT PLAN

If you find yourself with extra cash, invest in a retirement fund. The more money you divert to your retirement plan makes you eligible for deduction. Seek advise before taking this step.

DEFER YOUR INCOME

Request that your year end bonus be received the following year. Since income tax is collected for the year in which income is received, you would not be taxed for the deferred income. This should only be done if it lowers your tax bracket.

MAKE CHARITABLE DONATIONS

Did you know that by donating to a registered charity you pay less taxes? This is not a hefty amount but every dollar counts. Donations above standard deduction equals less taxes. Pair charitable deductions with other deductions for more savings .

GET A FLEXIBLE SPENDING ACCOUNT

In a Flexible Spending Account (FSA) money is deducted from your taxable income into a separate account for health care and other benefits. This reduces your taxable income. Be careful however because money in this fund is subject to the “use-it-or-lose-it” rule.

HARVEST LOSSES AND GAINS

If you have more loser stocks than gains, sell losers to offset your gains. To do so it is recommended to get the best tax CPA Firm to avoid the Wash Sale rule

GIFT TAX EXCLUSION

You can gift up to $14000 to family members or loved ones tax free. Although the money is no longer yours, you will save money through tax deduction .

Tax saving is not very difficult and with proper execution can prove quite useful beneficial. For more tax saving tips, visit your local CPA Firm.

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