Top 3 Ways to Save on Taxes - What to Know
The tax season plagues everyone in the working economy - from freelancers, start-ups to Fortune 500 companies. No one can run from the IRS, but the good news is that they offer plenty of cost-saving opportunities beyond tax deductions for different business owners every year.
Knowing how to lower your taxes can make a world of difference between paying thousands of dollars in excess to the government or having more to dedicate to your retirement account, investments, savings, and more.
Different Ways to Lower Your Taxes
Tip #1: Determine Your Tax Credits
Identifying your tax credits is arguably the most straightforward approach to cutting your taxes since it can directly reduce a person’s liability. This means that tax credits lower taxes dollar for dollar, making it a more desirable option than tax deductions since it impacts the tax due instead of being limited to the taxable income.
For example, if you have a $1,000 tax credit, you will no longer have net liability even if you owe the same amount in federal taxes. This means you can still have a $600 refund if you pay a total tax bill of $400 for taxpayers who make $58,000 or less or for married couples who make $116,000 or less.
Tip #2: Contribute More to Your Retirement Account
Another way to make shave off from your tax bill is to boost your retirement contributions, which can drop your taxable income by a significant margin and increase your retirement savings simultaneously.
This alone makes it one of the best strategies to save you thousands come April 15. For employer-sponsored 401(k) plans, it’s recommended to preserve the full $19,500 tax limit for 2020 since it is, in essence, “free money” for you.
Tip #3: Contribute More to Your Health Savings Account
If you want more tax-saving hacks to add to your arsenal, funding your health savings account offers the opportunity to put in pre-tax money for different medical-related expenses. This includes deductibles and other fees that don’t fall under the coverage provided by your insurance.
The Bottom Line: Money-Saving Ways Your Business can Cut Back on Taxes
No one can escape the reality of taxes as it plagues businesses of every size and industry, but your company doesn’t have to allocate more of your hard-earned money every April so long as you know the right tax tricks.
Working with a professional accountant not only secures your financial health, but they can help integrate money-saving strategies that can lower the taxes on your federal return so you can have more to reap for your efforts.
Why Choose Us?
If you’re looking for reliable accounting and bookkeeping services in Mermaid Beach to manage your tax returns and apply money-saving tactics, we’re the best accounting firm to call! Contact us at (07) 55041999 and see how we can help you!