The extended 2021 tax filing deadline is just one week away and before you know it you will be sitting down with a stack of receipts, forms and other financial documents. This process is never easy or pleasant, but it will be much worse if you end up owing money to the IRS. If you want to ease the pain of tax time and keep more money in your wallet, you need a plan of action. Being proactive now could save you a lot of money later, preserving or even increasing the size of your eventual refund. And remember–you don’t have to do it alone! RSG Accounting Services as a minority-owned firm with over 30 years experience filing state and federal taxes for individuals and businesses. Click here to schedule a free, no obligation discovery video conference!
Here are nine steps you can take today to lower your tax bill later:
- Add money to your IRA: If you have not already maxed out your individual retirement account (IRA) for the year, you have until the tax filing deadline of April 15 to do so. Adding extra money to a deductible IRA is one of the best ways to lower the tab on your taxes.
- Fund a health savings account: A health savings account, or HSA, can make budgeting for medical expenses easier, but it is also a powerful tax savings vehicle. Opening a new health savings account or contributing to an existing one is a great way to reduce the pain of tax day.
- See if you can claim the retirement savers credit: This special credit is designed to encourage people to save for retirement by giving them a special tax break. If you contributed to any retirement plan in the past 12 months, you should check your eligibility for this special credit.
- Use your side hustle to gain some tax deductions: If you work a side hustle, you can harness that extra job to gain some tax deductions. You will need to keep scrupulous records and retain your receipts, but claiming legitimate business expenses is a great way to reduce your tax bill.
- Claim the home office deduction: If you are eligible for the home office deduction, claiming it could lower your tax bill significantly. In order to qualify your home office must be used exclusively for your business – the kitchen table will not count.
- Donate appreciated stock to your favorite charity: If you have done well in the stock market and want to do good, you can donate those valuable shares to your favorite charity. By doing so, you will avoid the capital gains tax and a worthy cause will get some much needed funds.
- Offset capital gains with old losses: If you want to keep the stock instead of giving it away, you may be able to offset any capital gains with old losses. If you have a loss to carry over from previous years, you can use it to offset some, or even all, of your current gains.
- Take advantage of military tax breaks: If you are a member of the military, you may be eligible or tax breaks on travel and other expenses. These tax breaks could reduce your bill and ease the pain of April 15.
- Check your eligibility for the earned income tax credit: Even if you were never eligible for the EITC before, you may now be able to claim it. Before assuming that you are not eligible, take a few minutes to check.
If you want to ease the pain of tax time and keep more money in your pocket, now is the time to get going. April 15 will be here before you know it, so act now to get a bigger refund, or at least write a smaller check. And don’t forget to contact RSG Accounting today!
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