The end of the year is usually the busiest time for taxpayers. You’re usually trying to get everything wrapped up and finished before the new year begins. One thing you should put on your list for the end of the year is to start calculating your taxes and if you will owe taxes when you file. If you find out you are going to owe taxes, there are some steps you can take to lower your tax liability. Tax planning is an important part of keeping your financials in line and can help you stay on track and make filing your tax return easier.
If you think you will owe taxes, one step you can take to lower that amount is you can contribute more to your retirement. This is a win-win solution. Not only are you helping decrease your tax liability, you are also saving for the future. IF you currently contribute to a 401 (k), you can contribute up to $18,500 a year and if you have an IRA, you can contribute up to $5,500. These numbers will increase in the new year. Another bonus for taking this step is you may qualify for another tax credit! The Savers credit is worth up to $1,000 and is available to lower to middle-income taxpayers who are contributing to their retirement. Remember, tax credits lower your tax liability dollar-for-dollar. You can talk to a tax consultation or tax attorney about if you qualify for this credit.
Another step you can take is making a charitable donation! Not only can this help you lower any taxes you owe, but it can also help your community. You can get a tax deduction for non-cash and monetary donations that are donated to a qualified charitable organization. Along with your actual donation, you can deduct your mileage for every mile you drove for charitable service. The current rate is 14 cents for every mile you drive. It’s important that you keep track of all your receipts and the miles you drive. All donations made by December 31st will count for your deduction.
You don’t know every tax deduction and every tax credit, so make sure you talk with a tax consultant and find out what tax deduction or tax credits you are missing. Thousands of dollars are missed in tax deductions and tax credits every year. You can get credits from childcare, college, medical expenses, local taxes, mortgages and other items. You can either do research, get tax software, or get a tax consultant to help you find the best ones for you.
If you have tax questions or need help filing your federal tax return, Polston Tax can help. Our team of local tax attorneys and tax consultants can help you save the most money and stay compliant with the IRS. Don’t wait until you owe taxes or until the IRS audits you, call us today at 844-841-9857 or click below to schedule your free consultation!