The last thing anyone wants to hear after preparing their tax return is that they owe the IRS a considerable amount of money. Fortunately, there are many ways to reduce a tax burden. By maximizing all the deductions and credits available to you, there is potential to lower your tax bill substantially and maybe even get money back. Here are a few strategies for putting yourself in the best financial position during tax season.

Tips for Reducing Your Tax Liabilities

1. Contribute to Your Retirement Savings 

The IRS doesn’t tax any money you contribute from your paycheck to a 401(k). Thus, the more you funnel into a retirement account, the less taxable income you’ll have to show on your tax return. This can cut your tax obligation by quite a bit. You may also be able to deduct any contributions you make to an IRA. 

2. Take Advantage of Having Kids 

There are significant tax savings to enjoy just for being a parent. There are a couple different credit options that may be applied to each qualifying dependent you have. A credit is also available to adoptive parents. These are intended to help alleviate some of the expenses of raising children. 

3. Put Money in a College Fund

Placing money into a 529 savings account for your children’s college education is a smart investment, and it can provide an extra deduction on your state tax return. This money will grow tax-free for however long it’s in the account, and you won’t be required to pay taxes on it if it’s used for tuition. 

4. Be Charitable 

Many of the contributions you make to charity organizations are deductible, as well. This includes both monetary and non-monetary donations. Donating things like food, clothing, sporting equipment, and household appliances can amount to a sizeable deduction as long as you have receipts from a legitimate charity. 

Making sure you’re benefiting from all the tax breaks offered by the IRS can be challenging to do without professional assistance. Fortunately, a reputable tax advisor from Sharrard, McGee and Co., PA can help you prepare your tax return and keep you from paying more than necessary. With more than 40 years of industry experience, they have helped numerous High Point and Greensboro, NC, residents with everything from small business accounting to tax advising and consulting. They understand the ins and outs of the tax code and can present you with a number of tax-reducing strategies. Call (336) 884-0410 to schedule an appointment, or visit them online for more information on their services.