As the the tax deadline draws closer, there are a few money saving taxes moves you can still make.
Naturally, most people would prefer to pay as little tax as possible, while still complying with all of the rules and regulations of the tax system. Each individuals tax situation is a little bit different. But these four last minute money saving tax moves may be able to help you save on your tax bill.
Up Your 401(k) Contribution
Typically, any donations that you make to a 401(k) that is offered by your company will be taken out before taxes. When that is the case, you will be effectively lowering your taxable income for the year – while still being able to save that money for later.
Obviously, this is a tip that has plenty of other benefits aside from taxes, as using a 401(k) is a great way to save some of your money for later in life. It is never too soon to start saving up for retirement, so look at 401(k) contributions as an option that can help you in both the short and long term. You can make a lump sum contribution up until April 15th to help save on your taxes.
An Early Mortgage Payment
This next tip is a minor one, but every little bit helps when it comes to saving on your taxes. If you own your home, consider making your January mortgage payment a few days early in order to slide it in before the calendar year is up. Of course, it’s too late for this year, but you can do this next winter.
The mortgage interest that you pay on that payment may be deductible, so it can serve to slightly lower your overall taxable income. Of course, that means that your payment won’t be a part of next year’s tax picture, so this is really a case of just moving the savings up by a year.
Give to a Charity
It is always a good idea to find room within your budget for charitable contributions. Picking out a charity that is close to your heart for regular donations is a great way to give back to the community around you. In addition to the good that you will be doing, there are tax benefits to donating to charities as well. Your donations are going to be deductible in most cases (make sure to keep documentation), so you can subtract those donations from your taxable income. Finding a way to save on your taxes while helping others at the same time is a great way to approach this topic.
Avoid the Health Insurance Penalty
Sometimes, the best way to lower your tax bill is simply by avoiding having to pay penalties. One of the newest penalties that you can face on your taxes is the charge for failing to have a qualifying health insurance plan.
If you did not have health insurance for this past year, there may not be anything you can do to avoid the penalty – but you certainly can look for coverage now to avoid having to pay the fine again next year. In addition to steering clear of a penalty, adding health insurance is a good idea in order to protect your financial future.
Are you planning to use any of these money saving tax moves? How else do you plan to save on taxes?
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