It’s that time of year again when time must be put aside to pay the piper. Despite what you may expect, many Americans actually enjoy paying their taxes. This may be because they’ve learned of the many ways they’ve learned to increase their refund or limit their overall tax bill.
If you think you’ll owe taxes this year, you might also be interested in learning how to cut down on the total amount that you might owe. There are many different ways to legally reduce your tax bill and keep some of your hard-earned cash in your own pocket.
What do you need to know about how to file your taxes and save money? Read on and we’ll walk you through the basics.
Adjust Your W-4
One thing you can do to limit your tax debt before tax time is to take another look at your W-4 form. You likely filled out this form when you first signed up for employment at your current place of work.
At the time, it may have been filed in with a mountain of paperwork you needed to do to get started, and thus, it might not have gotten your full attention.
However, the W-4 form has everything to do with how much taxes you end up owing. It stipulates how much you want your employer to withhold from your paycheck each cycle for taxes.
If you have the withholding set too low, you can end up owing a huge amount later on. Adjusting this can help to make things easier for you come tax time.
Contribute to a Retirement Account
401ks and ROTH IRAs are fantastic ways to lower your overall tax debt. If you’re going to pay taxes online, you’ll want to first take the time to put money into these accounts.
How can this help? All money that is put into these retirement accounts becomes tax-deductible. That means instead of having to pay taxes on this income, you’ll be able to enjoy the money you made tax-free.
These accounts have certain contribution limits that you’ll need to be aware of, but they provide a great opportunity to limit your tax bill each year.
Look into Tax Deductions
There are so many different tax deductions out there and there is a good chance that you are eligible for more than you think. Charitable donations, home office needs, expenses related to work, and a whole lot more: these are all reasons why you might be able to lower your tax bill.
There are many potential deductions out there, so it’s important to talk to a tax professional or listen to experts like those on the Wealthability Show.
They can help you to learn how to file your taxes in a manner that will keep savings in your own pocket.
Owe Taxes? Use These Strategies
No one who owes taxes wants to pay a huge total come this time of the year. With the above tips and tricks, you might be able to legally work your tax debt down to a more manageable place.
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