3 Ways to Lower Next Year’s Tax Burden

Now that Tax Day has come and gone, most of us are breathing a sigh of relief. Filing your income taxes is never much fun, but at least it’s over – for now. Naturally, you’ll be picking up that pen and calculator, or signing into your online tax software, next spring. But for now you can forget about income taxes, right?

Actually, no. You could certainly take that approach, but then you’ll find yourself scrambling to the post office at the last minute next April. And since tax credits and deductions are based upon your actions during the year, you could miss valuable opportunities if you don’t plan for this year’s taxes on a regular basis. So, throughout 2017, remember to take these three steps.

Research credits. Income tax credits are amazing things. They reduce your tax burden, dollar for dollar, but the amount of the credit! But in order to claim these credits, you have to first know about them and take certain actions during the year. So, research tax credits now, so that you can recognize a valuable opportunity when it presents itself.

Organize your deductions. Itemizing deductions might help you lower your tax liability, beyond what the standard deduction could do. But again, you have to know about your potential deductions before you can claim them. Instead of scrambling to locate receipts next spring, start a file folder now and stash all deduction-worthy receipts in it.

Or, use one dedicated credit for all charges such as charitable donations or business expenses. Then when you file your taxes next year, your deductions are conveniently listed for you on the monthly statements.

Max out your tax-advantaged retirement account contributions. Contributions to a qualified retirement account can earn you a massive deduction – $18,000 this year, to be exact. And if you’re age 50 or older this year, you can even contribute an additional $6,000, for a total of $24,000. Saving for retirement is important anyway, but you should certainly take advantage of this opportunity to also save on your taxes!

Of course, you might not know whether your current contribution rate will help you achieve the maximum contribution for the year. Give us a call, and we’ll review your retirement plan. We can help you identify savings opportunities that you might be missing, and help you create a strategy to achieve your goals.