Use these Tips to Cut your Tax Bill

Taxes are an inevitable thing, and paying your taxes is something that few people enjoy. However, there are ways to cut your tax bill and save yourself a bit of money when it comes time to write that check to the government! There are countless ways to reduce your tax payment, and some strategies are more effective than others. That said, let’s take a look at a handful of strategies that you can use to save yourself some additional money when it’s tax season:

Look over your W-4

The W-4 is an incredibly important tax document, and is something that you give to your employer that instructs them on how much tax to withhold from each of your paychecks. As you can imagine, tweaking how much tax is withheld is a definite way to affect your tax bill! As such, knowing what to do with your W-4 is pretty simple: if you were unhappy with your previous tax bill and felt that it was higher than you’d like it be, then increase the withholdings. If you received a big refund check, then consider lowering the withholdings to reflect the change that you want to see!

Make Contributions to an IRA

IRA’s are classified as either Roth IRA’s or traditional IRA’s, and you’ll want to familiarize yourself with these terms. The reason that these can help ease your tax bill is that you may be able to deduct certain contributions to these IRA’s, and thus lessen the amount of tax that you owe. There are a number of factors that go into whether or not you can deduct these contributions, and how much you can deduct if you’re able to. Put simply, your ability to deduct these contributions comes down to factors like whether or not you’re married, if you and your spouse are filing jointly, and how much your combined income amounts to. In addition, there are limits on how much you can contribute, with a limit of $6,000 for those under the age of 50, and $7,000 for those over the age of 50.

Keep Track of your Medical Expenses

Certain medical and dental expenses may qualify to be written off on your taxes, so keep track of such expenses! Typically, you can deduct qualifying medical expenses that account for more than 10% of your gross income for the tax year in question, so keep documentation on hand should a medical expense of that magnitude befall you. Expenses that qualify can differ, so look into what expenses do and do not qualify to understand what you’re able to write off!