Tax season isn’t something most people look forward to, especially if they’re worried about owing on their taxes once they file. While taking minimal exemptions each year will help increase your refund, it won’t do anything to reduce your liability. The team at Fisher & Hodges CPA’s AC in Princeton, WV, wants to help protect your financial future. Below, they share five tips to help you reduce the amount you owe on your taxes.
5 Steps You Should Take to Reduce Your Tax Liability
1. Factor in Your Interest Payments
If you have a mortgage or student loan debt, or you used a loan to start a business, you might be able to use some of your interest payments to reduce your liability. Your accountant will help you identify qualifying interest payments when you file.
2. Make a Donation
Donating to a charity is a simple way to support a cause you love while reducing your tax bill. This works for both financial contributions and donations of goods. Just make sure you get a receipt for every donation; this will help you keep track of the total amount donated and makes filing your personal taxes simpler.
3. Pay Into an HSA
Many people with high-deductible insurance policies opt to use a health savings account (HSA) to save for deductible payments and medical costs. If you contribute funds to an HSA, you can deduct these contributions to reduce the liability on your personal taxes. However, you can only contribute a maximum of $3,400 as an individual and $6,750 if your family members are on the account.
4. Save for Retirement
While planning for retirement is a smart decision no matter how old you are, it can also help you save on your taxes. Contributions to 401(k)s or traditional IRAs can be deducted on your taxes each year. Unfortunately, there is a maximum amount you can contribute to each account. Check with your retirement plan provider for the current maximum contribution level.
5. Work With a CPA
Many people are qualified for deductions they weren’t even aware of. Rather than filing your taxes on your own, work with an experienced CPA to ensure you get the most out of your refund. They’ll be able to assess your current situation and identify savings you may be missing out on.
Let an experienced accountant from Fisher & Hodges CPA’s AC help you reduce your tax liability. Their team will help you plan for and file your personal taxes, so you can get the most out of your refund. Visit their website for more information on their services, and call (304) 425-2470 to schedule a consultation today.