Spring may be close, but we all know the much anticipated weather change will take longer than we’d prefer. While you’re patiently waiting for the next season to be here, why not focus on your finances and prepare for your taxes. If you’re unsure about what you can do, and you don’t have a financial planner Orlando you can talk to, here are 3 easy ways to lower your taxes.
Lower Your Taxable Income
Although there are numerous reasons why it is a good idea to file your taxes early, one big benefit to waiting until the mid April deadline is to capitalize on opportunities to lower your taxable income. For example, you can contribute up to $6,000 to your IRA and still deduct that contribution from your 2020 taxes. There are other deductible retirement options for anyone who started a side job or freelance gig this year as well. Plus, if you have a high deductible on your health insurance plan, contributing to a Health Savings Account could save you some serious money on your taxes and health care.
Fund Your FSA
You may or may not be aware that the IRS allows you to funnel money directly from your paycheck, tax-free, into your Flexible Spending Account. So if your employer offers one, using an FSA is a great way to lower your tax bill without changing anything in your day to day. The only catch is that some employers require you to use all of it in the calendar year. The benefit is that it can be used for daily medical items, doctor visits and other health related expenses.
Adjust Your W-4
The W-4 form is one that you fill out and give to your employer, disclosing how you want to be taxed. If you’re consistently getting stuck with a high tax bill, you may be able to raise the amount you withhold, thus lowering the amount you would owe to the IRS at tax time. Conversely, if you received a large refund, but struggled with money each month, tweak your W-4 and take home more of your paycheck. The convenient thing about the W-4, is that you’re able to change it at any time.
Taxes require some forethought, and preparation. They are tough to navigate without expert help, and finding an accountant who’s able to help with the big picture is difficult. Ask your financial expert for tax prep help and stop dreading tax time.
