5 Tips To Cut Your Taxes
An unexpected tax bill can ruin anyone’s day. When the amount is more than what you expected, it can be frustrating to see that you owe so much to the government. The IRIS issued more than 111.8 million dollars in 2018, and this year can cause even more windfall if you play your cards right.
Taxes are something you cannot and should not avoid. However, there are slight tweaks you can make to save tax money. In most cases, you must itemize your taxes rather than going for a standard deduction. This blog post would share tax deduction strategies that help save hundreds of dollars in tax amount so you can plan your trip to the Bahamas with the added savings.
1. Twist Your W-4 Form
The W-4 is tax payer’s form that is given to your employer. The employer mentions the amount to without on your paychecks.
If you were caught off-guard this year with a huge amount, then be prepared for the future. You can ask your employer to raise your withholding amount, so you have to pay less next year.
If you received good returns on your taxes, then reduce your withholding to receive more next year. Your W-4 form can be changed anytime, so don’t worry about going to the government for it.
2. Take Help From A 529 Plan
The US government is not as bad as you think. When you opt for a 529 plan, you can shave a few bucks off your taxpayer’s amount. The 529 plan is where you save money for your child’s college. When you withdraw this amount, it is free from tax.
3. Contribute To Your Retirement Plan
Add as much as you can to your IRA plan. When you do, you have less amount that is liable for taxes. At the same time, you are saving up for retirement as well. This method is best when you want to cut money off taxes as IRA plans make your income directly free from tax.
4. Go For A Health Savings Account
Every year in April, the US government launches health savings accounts. These are citizen benefactor accounts that help cover your medical cost for the year. As you pay off this account each month, your taxable amount is reduced. In the process, you are also saving up money for rainy days.
5. Collect Tax Credits
Tax credits are a great plan to cut off tax expenses. Since tax credits reduce your tax bill on a dollar-for-dollar basis, many families opt for it.
You can deduct a whopping $2000 from your taxes for each qualifying child under 17. If you can prove that $2000 child tax credit can save you $2000 in taxes. Parents that use daycare services may also be eligible for this and save up to $3000 per child and $6000 for two.