As a full-service accounting firm, a major desire of our clients is for us to help them to cut their tax bills. We certainly have the knowledge and expertise to save you as much as possible when we plan throughout the year and prepare your taxes, but there are also ways that you can reduce your tax bill on your own. In today’s blog, The Youngblood Group, LLC provides tips on how you can lower the amount you’ll pay when April 15th rolls around.
Adjust Your W-4
Altering your W-4 withholdings can make a helpful difference when tax season rolls around. If you were surprised by how much you owed on the most recent tax bill, you can adjust this form so your employer withholds more money each paycheck. Alternatively, if you received a massive refund, and you would rather take home more each pay period, you can reduce your withholding. It is easy to change your withholdings, so feel emboldened to do so to optimize it for your needs. Ultimately when it comes to taxes, you want as few surprises as possible, so a little planning goes a long way.
Take Advantage Of An HSA
Many employers offer HSAs, but you can also get one through a bank. If you are not aware, this is a health savings account in which the funds are used to pay for qualified medical expenses. Contributions to one are tax-deductible and withdrawals are tax-free — as long as you use the money for health-related costs. Utilizing an HSA is especially wise if you have a health insurance plan that has a high deductible. An individual can contribute a maximum of $3650 a year and a family can contribute $7300. Those who are 55 or older can contribute an extra $1000. It is always wise to save for health expenses, but the tax benefits of maxing out your HSA make it particularly advantageous.
Make Charitable Contributions
You are likely aware that you can deduct money you give to charity. You can also donate various items like food, clothes, toys, and more. You can deduct up to $300 a person before needing to itemize these gifts. If you find yourself donating quite a bit throughout the year, make sure to keep a list and find estimated prices for each item, as you can possibly see significant reductions in your tax bill.
Utilize Your 401(k)
Like saving for medical expenses, it is also important to save for your retirement. By contributing to a 401(k) — which is often through employers — you are not only setting yourself up for future financial success but are also reducing your taxable income. For 2022 you can put up to $20,500 into one of these accounts, which means you are not being taxed on this income. This can see major benefits come the time to pay your taxes. As with anything related to your finances and taxes, it is advisable to still speak with an accountant and tax professional to make sure this is the best way to see financial success.
Contact Us To Learn More About Reducing Your Tax Bill
We love helping our clients save money and meet their financial goals, so we are here to assist you. If you have any questions or would like to learn more, please schedule an appointment today.