Dealing with taxes is never fun, especially for people who are not fond of numbers. However, if you own a business (whether big or small) or you are simply a law-abiding citizen that pays their taxes, then you should always plan for your taxes every year.
Here, we will give a couple of tips you should keep in mind when it comes to income tax planning this year.
Keep Your Retirement Plan Contributions Maxed Out
Maxing out your retirement plan contributions can reduce your tax bill dramatically. However, if you cannot afford the maximum amount provided, then you should at least try to contribute the exact amount that is provided by your employer.
The employer match will act as an immediate return on your own money, as all of the funds will be tax-deferred and would all become tax-free eventually.
Aside from being able to help the needy, you will also be able to minimize your taxes, which is actually a win-win situation. You do not have to donate money at all times, though. Do it only when your budget permits.
It does not always have to be cash either, as you can also donate in the form of clothes, food, furniture, working electronics, and other tangible and useful items. You just have to write their market value as an itemized deduction on your taxes for them to qualify. Do not forget to get the receipt stating that you donated these items.
Take Note of your Beneficiary Designations
This is something nice you can do for your beneficiaries. You might not benefit out of this, but your beneficiary surely will in the future. Make sure to keep your list updated before the year ends so you can help minimize their taxes in the future. This is important in case an accident happens, or if you suddenly pass away.
You never know what might happen to you, and updating the beneficiary list and properly coordinating it will dramatically increase the assets that your beneficiary will receive.
Be Careful About Fraud
Nobody wants to be a victim of fraud, and you definitely should be careful when it comes to giving sensitive information, such as your Social Security number and other government-issued numbers and IDs.
Never give sensitive information to strangers or to third-party websites, especially if you feel like they are not legitimate ones. Filing your taxes should only be done on the IRS website itself or with a trusted tax preparer and no one else.
Do your research when it comes to income tax preparations and returns. The more you know, the less tax you would have to pay and the less will be deducted from your income. Remember that you can easily become a victim of fraud anytime and anywhere, which is why you would have to be wise about keeping your information private at all times. Trust only your legal advisor and your immediate family and beneficiaries when it comes to tax planning and the likes. Start preparing as early as now!