5 Big Tax Saving Tips for the Entire Year
Tax season is officially here! Many Americans get nervous and antsy around this time of year as they may be worried about their tax liability and are looking for some tax saving tips to boost their tax refund or reduce their tax liability.
Here is a list of 5 big tax savings that can be used year-round:
5 Things You Can Do to Lower Your Taxes
Increase Your Retirement Contribution
This is one of the most effective ways to reduce your tax liability and build your wealth account. You can contribute up to $18,000 per year to your 401K plan and up to $24,000 if you are 50 or older.
Money contributed to the plan reduces your taxable income and therefore reduces your overall tax liability for the year. Also, most employers will match your contribution so it’s a sure way to get an increase to your salary.
Getting an education is expensive, but there are ways to curb the cost of college tuition. One such way is through your employer. Companies can offer employees up to $5,250 per calendar year for education purposes. This money is a write off for your company but it’s tax free to you. The courses don’t have to be work related or even at a graduate level to qualify for this IRS program.
What a wonderful way to learn new skills, enhance existing ones, improve your marketability as an employee and not pay any tax on this benefit. It’s like a hidden raise!
Save the Planet and Think Green
Reduce your tax liability by installing an alternative energy system at your home. You can receive a tax credit of up to 30% for putting a solar system in your house.
You can save thousands of dollars on your tax bill, save on your electric bill for years to come and save our planet with clean energy. What a win-win situation!
Donate Your Appreciated Assets
Most everyone knows you can get a tax deduction for charitable donations. However, did you know you can donate your appreciated stocks and mutual funds to charity. By doing so you will save yourself from paying the capital gain tax on your stocks and you will be able to write off the full market value of your stocks on the date of contribution.
You can claim up to 50% of your AGI in one year. Who said there isn’t a way to make the world a better place and save money while doing it.
Use a Home Equity Line of Credit
Generally, interest on up to $100,000 home equity line of credit (HELOC) can be deducted as part of you itemized deductions.
You can use the funds to pay off other types of debt like your credit card balance.
You will probably pay a lower interest rate on your HELOC in comparison to the credit card interest, and you will gain the ability to deduct that interest as opposed to your credit card interest which is not deductible.
This strategy allows you to reduce your tax bill and gain more control of your finances.
There are more ways to save on your taxes year-round and we will share those ways with you in the future. To start saving today, claim your complimentary tax consult.