With the busy tax season coming to an end, most Americans have filed their return and either received a refund or made payment arrangements for a tax liability. If you are among those unlucky enough to owe additional taxes every April, you might be wondering what you can do to lower your tax bill next year. Through careful planning you can realize a noticeable tax savings next year, and in the years that follow.
Steps you can take now to lessen the tax blow in 2016 include:
- Maximize investments, including the amount you contribute to your 401(k). Money withheld from your paycheck for your retirement is tax exempt and will help you to lower your taxable income, which in turn will lower the amount of taxes you owe.
- Increase your charitable donations. The amount you donate to Church and other charities is tax deductible and will help to lessen your tax liability.
- Invest in your kids’ future. Most states have a college savings plan that allows you to make contributions for the expenses of college, and those donations are tax deductible on your state tax return.
- Change your withholding status. If you end up owing taxes every year it might be time to take a second look at the amount being held out of your paycheck. You can change the withholding so that more is held out in taxes over the year, which will reduce the amount you owe when filing your return.
Finding ways to save on taxes is an investment that pays off. If you frequently find yourself paying extra taxes every Spring, take steps now to change the outcome of your 2015 return. Knowledgeable legal tax professionals will help you identify where you can make changes that matter. Call us today for more information.