It’s the end of the year and one of the first things you do is file your taxes. But what if I told you there was an easier way to save money on taxes? A way that doesn’t take years of accounting training. A way that can save you thousands of dollars in taxes.
With April 15th tax deadline you must act fast if you want to be able to take advantage of saving money during the tax season. If you start before you can save time and gather all your tax forms, donations, and receipts or anything that you will need for the following filing your taxes. Gathering everything before can help you prevent of gathering everything last minute and rushing to get your taxes filled. These three simple steps can be a huge help in helping you save money on taxes this year.
1: Donation for state(schools) and local donations
Money that is contributed to organizations, thrift stores, and even schools can be a tax deductible on your taxes. Tax deductibles can reduce the taxable income that you have received and to help save you money. Now in 2021, deductions have risen to $300 a person rather than just $300 per tax return done on tax season, so married couples that are filling together are able to deduct $600 altogether of donations. Things to remember when you donate is to find qualified organizations to donate to. For example, local thrift stores or even donating to schools. Another thing to remember is to document your donations no matter the amount like a receipt, or donation slip, that has your name, donation, and date so that you can have that for your taxes so that can go towards your deductible and help save you some money on tax season.
2: Contribute to your Health Savings Accounts (HSAs)
Does your health insurance come with deductibles? If so, you’re probably eligible for a health savings account. This is a type of savings account that allows you to set money on a pre-tax basis to be able to pay for qualified medical expenses. By using money that was put into the Health Saving Account this helps to pay for deductibles, copayments, and other medical expenses. The Health Savings Account may be provided as a benefit in some workplaces but not all, but this allows to help if not covered. For 2022, you can contribute up to $3,650 for a plan yourself and if it is a family plan then you can contribute up to $7,300.
The Health Saving Accounts have become popular option for people who are wanting to manage their healthcare cost. This also works as a tax advantage saving tool. There are a lot of rules about Health Savings Accounts, visit the IRS Website to learn more information.
3: Increase Retirement Account Contributions
If you have any extra that you are sitting on, you can use it to lower your tax bill while saving for the future also. Any 401K contributes get taken out from your paycheck on a pre-tax basis to your taxable income. A 401K is an employee sponsored retirement account. It allows employees to have a percentage of their salary to go to a retirement account. The amount of money you contribute to your retirement account the government can tax and this is a way for you to save some money in tax season. For 2021, the limit for taxable contributions to a retirement account is $6,000 but for people are the age 50 and over are allowed to contribute another $1,000 to their retirement account and this helps reduce the amount of money you owe for taxes