Want to save some money on your taxes next year? Of course you do—doesn’t everyone? Our tax service in Des Moines, IA works with a variety of clients of all different income levels and financial backgrounds to help them cut their tax liability and continue to build their savings.
Here are just a few examples of some of the strategies you can implement in your tax preparation to make sure you cut down your liability in the coming year.
Your income gets taxed in the year you receive it, not the year you earn it. So, if you have the opportunity to defer any of your income into next year, it might make sense to do so if cutting your tax liability is going to be important to you. If, for example, you’re going to get a year-end bonus, you might consider waiting to receive that bonus until the calendar flips over.
This is a bit easier to accomplish if you’re self-employed or work as a consultant or freelancer. You can delay when you bill your clients into January if you performed work for them in December.
You could potentially accelerate some deductions this year if you qualify for them. Donate some of your appreciated stock or property to a charitable organization. If you’ve owned that asset for more than a year, you can get a double tax benefit from that donation by deducting the market value of the property on the date of the gift—that means you’ll also avoid capital gains taxes on the appreciated value of the item.
Just make sure you get receipts to back up any charitable contributions you make, even if they are small amounts. In the event of an audit, you’ll need to have some records indicating you gave money or valuable property to the organization in question.
Sell losing investments
If you know you got some capital gains throughout the year but don’t want to have to worry about the capital gains taxes, you can offset some of those gains by selling some investments you believe to be duds. This means you can get rid of some of those losing investments now before they get worse, and minimize the amount of money you’d have to pay on your investments that are doing well.
Max out your retirement account contributions
Tax-deferred retirement accounts give you a way to cut down on your taxable income while still allowing that money to grow for the future. If you’re able to put the maximum amount of money allowed into a 401(k) in a given year, you’re going to set yourself up really well for your future and will also be able to significantly cut down on the taxable income you have for a given year, especially when you consider the maximum is close to $25,000 if you’re over 50 years old.
These are just a few examples of some of the strategies you can implement in your tax planning to save on your taxes next year. For more information, or to schedule an appointment with our tax service in Des Moines, IA, reach out to Accounting & Tax Professionals, PLC today.