This is the first year many taxpayers noticed a significant change in their tax return as a result of the tax code overhaul approved by Congress at the end of 2017. Unfortunately, a number of filers were unpleasantly surprised to learn they would be owing the government money instead of receiving a refund as they normally do. If you were part of this group, it’s time to start tax planning now so you can maximize your savings for next year, using the following strategies.

Tax Planning Tips to Minimize Your Bill to the IRS  

1. Adjust Your Withholdings 

One of the main reasons people owed more this year is because they failed to adjust their W-4 to reflect the modifications that were made to tax withholdings. This form is used to tell your employer how much tax you want withheld from your paycheck. If your tax bill was considerably higher than usual, your first tax planning step should be increasing your withholding so more money is taken out during the year and you owe less when tax season arrives. 

2. Keep Detailed Records of Medical Bills 

If you have quite a few medical expenses, they may help reduce your tax obligation as long as you keep accurate and detailed records of what was paid. The IRS allows people to deduct qualified health care costs that equal more than 7.5% of their adjusted gross income. However, claiming medical bills will only make sense if you’re filing an itemized deduction.

3. Contribute to a Retirement Account 

Making contributions to a traditional 401(k) or IRA account directly from one’s paycheck not only helps save money for retirement but also lessens a person’s taxable income. Starting in 2019, individuals can put up to $6,000 in an IRA if they’re under 50 or $7,000 if they’re 50 and over. If you have access to a 401(k), the limit is $19,000 for those under 50 and $25,000 for those 50 and older.

Being proactive about tax planning can really pay off when it comes time to file your taxes once again. To ensure you’re taking advantage of all the ways to lower your tax bill, consult PMC Tax Services. Their skilled tax preparers have extensive knowledge of the tax code and can offer suggestions that you may not be aware of. Based in Lincoln, NE, they have been providing residents throughout the state with reliable and accurate tax preparation services for 30 years. Call (402) 467-5529 to set up an appointment or visit them online for more information about their offerings.