If we close our eyes tight enough, we can envision our parents at tax time…
An adding machine, crumpled receipts, and coffee-stained 1040 forms littered across the dining room table. For most, the six weeks from the beginning of March until the middle of April were stressful and angst-ridden.
But this is not your parents’ tax season.
Here are eight tax strategies to consider as you circle April 18 – yes, that’s this year’s deadline – on your calendar.
Contribute to a retirement account
You may be able to lower your tax bill by contributing to a traditional IRA, 401(k), or another tax-advantaged retirement account. You can make contributions for the previous year until the deadline.
If you have significant deductible expenses, such as mortgage interest, property taxes, charitable donations, or medical expenses, you may be better off itemizing your deductions instead of taking the standard deduction.
Maximize education tax credits
If you paid for higher education expenses in the previous year, you may be eligible for education tax credits such as the American Opportunity Credit or the Lifetime Learning Credit.
Review your portfolio
Consider selling losing investments to offset gains and lower your tax bill. You can also contribute appreciated investments to charity to avoid paying capital gains taxes.
Take advantage of Health Savings Accounts
If you have a high-deductible health plan, you may be eligible for a Health Savings Account, better known to many as a HSA. Contributions are tax-deductible and can be used to pay for qualified medical expenses.
Make charitable donations
Donations to charity are tax-deductible, so consider making a last-minute donation to a qualified charity before the tax deadline.
Claim business deductions
If you’re self-employed or a small business owner, make sure to claim all applicable business deductions, such as home-office expenses, business-related travel and meals, and equipment purchases.
Remember, you are not alone. We’re here to help eliminate the stress (and the adding machine).