Setting goals around your income, investments, and other facets of your life gets you one step closer to accomplishing them and on a path to success. For instance, you can benefit greatly from setting protective financial goals, such as reducing your tax burden. Continue reading to see how you can use the following strategies to lower your tax bill.
Tax Deductions
Itemizing your tax deductions reduces your taxable income and can move you to a lower bracket. Writing your deductions throughout the year will help you stay on top of them. You can also use the standard tax deduction if your itemized deductions are lower. The standard deduction for 2023 is $13,850 for single filers and $27,700 for married couples filing jointly. Popular tax deductions include mortgage interest, medical expenses, capital losses, and charitable contributions.
Tax Credits
Tax deductions are already great, but tax credits are even better. Credits reduce your total tax bill instead of your taxable income. You will save a lot more with a $3,000 tax credit than you would with a $3,000 tax deduction. Some tax credits, like child tax credits, require you to be within a certain income level to qualify.
Retirement Account Contributions
Retirement account contributions to traditional 401(k) plans and IRAs count as tax deductions. However, these contributions are above-the-line tax deductions. This distinction allows taxpayers to enjoy the tax benefits of retirement account contributions while using the standard deduction.
Get Help from the Pros
There’s more to it than the basic strategies, and saving on taxes can get complicated, especially if you want to maximize your savings.
You can achieve more success and get the maximum tax savings with the right partner. KPN and our affiliated company, BLW Wealth Management, have a team that can navigate the legal nuances of filing taxes and help you access new opportunities to save, which is essential. Tax planning services are among the few that allow you to save time and money.
Reputable tax professionals can review your forms, make recommendations, and file taxes for you to preserve your wealth and reduce stress.
We offer tax services and can help you with every step of the process, including the following:
- Tax preparation: We check for errors, work with people and businesses, and discover deductions and credits you can use.
- Tax planning: We show you some strategies to legally reduce your taxes and help you capitalize on some of the more obscure state and federal laws.
- IRS Audit Representation: No one wants to get audited by the IRS, but we can guide you along the process and handle the paperwork. We can represent you during an audit so you can continue with life as usual.
Getting a head start on your taxes can make it easier to lower your bill and reduce stress. We are eager to help with your tax planning when you are ready. In the meantime, let us know if you have any questions.
P.S. Tax planning is one component of wealth management. We also offer services to help you grow wealth and address other areas of your finances. If you need any help on your financial journey or have a question, you can get in touch here.