Earning big money is, of course, tempting, but you can’t deny the fact that with big money comes hefty taxes. Tax planning is tedious, but you must jump into this to save money. Hiring professional accountants is always recommended because they can reduce taxes with their proven tax-saving skills. If you want to do it independently, below are some tips you must follow in 2024.
Make More Contributions To Your Retirement Plans
It is indeed one of the best ways to save your tax money. You have to establish retirement accounts and contribute more money to them. The money submitted to the retirement account is later deducted from your income taxes. The best part of setting up a retirement account is that you also get investment earnings from those accounts but don’t have to pay taxes.Ditch Bad Investments
If there are terrible investments, like those not generating profits, it is high time to dump them. For instance, if you have invested in mutual funds and the losses have reached up to $3000, consider them. If you don’t do that now, you will likely carry those losses to the next tax year.Establish Charity Funds
Even if you hire an accountancy firm to help you cut your tax expenses short, they would advise you to establish a charity fund and start donating to your favorite charities. Doubling up your deductions is the best way to claim them.Don’t Overlook Medical Deductions
Most business owners buy health insurance. However, they still need to understand the difference between health insurance and having a health savings account. Establishing a health savings account is highly beneficial as it covers all medical expenses. When selecting this account with your bank, you also get deductions from your insurance plan. The money you submit to this account is yours forever, and you can withdraw it once you reach age 65. It is one of the most essential tax-saving tips you must follow.Get Benefit From Exclusion Gifts
In 2019, they increased the gift tax exemption from $14,000 to $ 15,000. You can easily save tax on this money by donating a gift to a family member. Parents can donate gifts to their children and keep their tax money by utilizing it within their homes. These exemptions are made yearly; you don’t have to worry about the lifetime exemption limit.Make Depreciation Deductions
Depreciation is the best opportunity to reduce your money. Whether you are a small business owner, you will get this opportunity every year. All you have to do is buy some new equipment and take write-offs on those purchases. To enhance your depreciation deductions, you can also buy vehicles. So, what you are waiting for is if you are running a business, just talk to your tax preparer and make some new purchases.
