5 Ways to Save on Taxes
With Tax Season quickly approaching, now is a good time to incorporate a few tax planning strategies to help reduce your taxes before December 31st.
Offset your investment gains with investment loses. 2020/2021 was a big year for people investing in the stock market. If you bought any investments in 2021 that are currently in the red, you can sell those losing investments to offset any profits that you may have gained. These losing investments have to be sold before December 31st to take effect.
Max out your retirement Contributions. Tax advantaged retirement accounts allow you to make pre-tax contributions that ultimately help you save for retirement and reduce your taxable income. Ex... If you contribute $5,000 to your Traditional IRA, you can get a $5,000 tax deduction!
-Max Limits: 401K = $19,500 Traditional IRA = $6,000 SEP IRA = $58,000
-Contribution Deadline: April 15th, 2022
Defer Income. If you are self-employed, you may be able to defer your December invoices to January of next year and if you are a W2 employee... you may be able to defer your year-end bonus to next year.
*You can also consider selling any winning investments until January 1st.
Increase any last minute deductions. If you are self-employed, you may want to consider... booking that business trip, attending that business conference or buying those supplies before December 31st, so that you can claim that tax deduction this year.
Donate to Charity. For 2021, if you are Married filing Jointly... you are able to deduct up to $600 and up to $300 if you are filing single!