There’s no way to get rid of your tax burden completely but there are ways you can minimize the hit to your wallet next year. Planning is key, if you start looking to April now, you can reduce the amount of taxes you will have to pay. The experts at Broussard Poché, LLP know there’s more to tax planning than just saving receipts for deductions. Here are 5 ways you can lower your taxes for the coming year.
- Contribute to your IRA.
This is one that most, if not all financial advisors will recommend. Contributions to a retirement plan are one of the best ways to reduce a tax bill; depending on the type of plan, the contributions may not require itemization.
- Buy What You Need
People with home-based businesses may want to consider buying that new computer or office equipment. Many items you need to work from home are tax deductible. But keep in mind, only a fraction of home expenses, such as utilities or insurance, may be covered. Plus, if you work from home but have an actual office somewhere else, home office deductions don’t apply. Speak with your tax professional about what will and won’t work in this area; it’s worth the conversation and could lower your tax bill by a noticeable amount.
- Contribute to flex spending plans
If your employer lets you contribute to a flexible medical spending plan, take advantage of it. A flexible spending plan (FSA) lets you set aside a portion of your earnings in a separate account managed by your employer. These funds are not taxable and normally must be used by the end of the year.
- Buy a home
Renting is attractive, but when you own your own home, you build wealth as your home increases in value and your mortgage is paid down. In addition, you can take a tax deduction for the mortgage interest and property taxes.
- Hire your kids
If you own your own business and your children are old enough to work consider hiring them for things like filing, answering phones etc. If they are under the age of 18 and your business isn’t incorporated, there won’t be any social security or medicare tax on their wages and they can earn up to $6,300 without having to file a tax return.
For more ways that you can lower your tax burden next year, contact one of our tax experts at Broussard Poché, LLP. We can help you keep a little more of that hard earned money in your pocket.