Tax season may seem like a long way off, but it’ll be here before you know it. No one wants to think about taxes, but it’s important to think about the ways you can cut your bill down as much as possible. It’s never too early to start planning. Here are a few easy tips below.
Reduce your taxable income
Contributing more to your 401(k) is a great way to cut your tax bill. This method lowers your gross income for the year, which basically lowers your taxable income. Additionally, the amount you can contribute to your 401(k) has increased in 2022 from 2021.
Look for tax credits that apply to you
There are many tax credits and deductions available to taxpayers. By doing a little research, you may be able to find tax credits and deductions that can save you money. For example, tax credits are available for education expenses, energy-efficient home improvements, and charitable donations. There are also deductions available for medical expenses and business expenses. By taking advantage of all the deductions and credits that you are eligible for, you can reduce your tax liability and keep more money in your pocket.
Sell bad stocks
If you’re an investor in the stock market, a great option is to sell off any bad stocks you may have. If you get rid of them, you can offset any capital gains you may have and reduce your tax liability. Of course, you’ll want to consult with a tax professional before making any decisions, as there may be other options. But if you’re looking to lower your tax bill, selling off bad stocks is certainly one option to consider.
The importance of tax planning cannot be overstated. There are many ways to go about it and hopefully, the tips shared with you will help bring down next year’s tax bill!
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