Minimizing your tax liability usually takes professional assistance and a year-round strategy designed to maximize your deductions and credits. However, there are some last-minute steps you can take to reduce your tax bill, even in the closing months of the year. The following advice could lower your exposure before tax return preparation season begins.

Year-End Tax-Saving Tips

1. Maximize Retirement Contributions

401(k) and Roth IRA accounts provide solid foundations for your retirement savings, but they also offer tax advantages that can save you money today. The IRS allows workers under the age of 50 to contribute up to $19,000 to a 401(k), while older employees may defer taxes on up to $26,000 in contributions. If you qualify for a Roth IRA, you can increase the tax benefits by contributing the maximum $6,000, or up to $7,000 for workers over 50. Contributions to 401(k) accounts must be made before December 31, while you have until the tax return deadline to contribute to your IRA.

2. Offset Capital Gains With Stock Losses

Losing money on investments is never ideal, but selling off underperforming stocks can help offset gains you made elsewhere. If you made a significant profit selling stocks or other assets this year, you still have a few months to cut your losses on investments that have lost value. In some cases, you might be able to deduct up to $3,000 in capital losses from your normal income.

3. Collect Documentation

Before starting your tax return for the year, collect all of your receipts, invoices, and earning statements. Having all the documentation you need reduces the stress of filing your returns and ensures you get every deduction for which you qualify.

For over 20 years, business owners and individuals throughout the La Crosse, WI, area have relied on Gillette & Associates for effective year-round strategies and fast, accurate tax return preparation. No matter how complex your finances may be, their accountants have the skills and in-depth experience to reduce your tax liability as much as possible. Visit their website for more on how they can help simplify your tax return preparation, and call (608) 784-8355 to make an appointment.