Tax Tips for the New Year
Updated: Dec 21, 2022
As the new year approaches, it's important to start thinking about your finances and how to save money on your taxes. Here are some tips to help you get started:
1. Contribute to your retirement accounts: Contributions to 401(k)s, Traditional IRAs, and other tax-advantaged retirement accounts can lower your taxable income, potentially reducing your tax burden. If you're self-employed, consider setting up a Solo 401(k) or SEP IRA.
2. Take advantage of tax credits: Tax credits can significantly reduce your tax bill, and there are many available for various situations. For example, the Child and Dependent Care Credit is available for those who pay for childcare expenses, and the Earned Income Tax Credit is available for low- to moderate-income earners. Make sure to research and see if you qualify for any credits.
3. Keep track of your deductions: There are many deductions available that can help lower your taxable income, such as the mortgage interest deduction and charitable donations. Keep good records of your expenses throughout the year so you can take advantage of these deductions when it comes time to file your taxes.
4. Consider using tax software: Tax software can make the process of preparing and filing your taxes much easier, and many options are available for a reasonable price. They can help you accurately calculate your tax liability and take advantage of deductions and credits.
5. Stay up to date with tax law changes: Tax laws are constantly changing, and it's important to stay informed about any changes that may affect you. The IRS website is a good resource for staying up to date on tax law changes and finding out about new credits and deductions that may be available.
By following these tips, you can potentially save money on your taxes and make the process of preparing and filing your taxes a little easier. Remember to always consult with a tax professional if you have any questions or concerns.