Reduce Taxes

Do you feel like you’re paying too much in taxes?

To significantly reduce your taxes now and in the future, you need to plan ahead. There are several strategies you can adopt to lower your tax bill.  

Max Out Your 401(k), If Possible

If you contribute the maximum for 2024 ($23,000 or $30,500 for taxpayers 50 and over) towards a pre-tax 401(k), you will greatly reduce your taxable income. If it's not possible to contribute the full amount, you should at least contribute the maximum amount that will be matched by your employer if they offer an employer matching program.

Contribute To A Health Savings Account (HSA)

Health Savings Account, or HSAs, are perhaps the most underutilized tax-advantaged way to grow our money. Like a Roth, earnings are tax-free, but HSAs are also tax-deductible. So you save on taxes now and in the future. Your HSA earnings are tax-free if you use it for qualified medical expenses in the future.

Consider Switching Future Contributions To A Roth 401(k)

Depending on which tax bracket you are in, and whether you can absorb a slight reduction in your take-home pay, consider switching all your future contributions from pre-tax to a Roth 401(k), if it’s an available option. This way, you will be able to pay taxes while your tax bracket is low, and thus avoid paying higher taxes when tax rates go back up.

Take Advantage Of Tax Credits

There are many tax credits available. Each year the IRS releases the tax credits and deductions available to filers. It’s important that you take advantage of every tax credit that you are entitled to. Tax credits reduce the amount of tax that you owe, not just your taxable income

Maximize Roth IRA Contributions

Roth IRAs are taxed up front. If you are eligible, the tax savings could be immense. While your Roth IRA contributions don’t lower your tax bill today, the money you withdraw when you retire, including earnings, will be tax-free.

Donate To Charity

You can take advantage of a charitable tax deduction through a standard donation or itemization. You can claim up to $300 in donations for the standard deduction. These donations must have been made in cash to 501(c)(3) charitable organizations. Cash donations include those made by credit card, check, or debit card.

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