Business

5 Must-Do Savings Strategies To Optimize Your Tax Returns

Tax season is quickly approaching, and nobody wants to have additional debt when it comes time to file in April. You can, however, use a variety of clever techniques to lower your tax liability and overall tax debt.

Here are five strategies to increase your tax refunds.

  1. Make the Most Contributions to Your Retirement

You can postpone paying income taxes if you contribute the maximum amount to your retirement account or accounts. IRAs and 401(k)s are two examples of retirement funds that offer some of the best ways to deduct taxes. You’ll be saving for the future in addition to lowering your tax burden.

In 2023, the maximum allowable deduction for 401(k) contributions is $22,500, exclusive of employer contributions. You can add extra catch-up contributions to your 401(k) in 2023 if you’re over 50. The maximum amount you can contribute is $7,500 annually, or $30,000. The highest tax-deductible contribution to an IRA for 2023 is $6,500, or $7,500 if you are over 50.

  1. Postpone bonuses or payments

Consider requesting a deferral if you anticipate receiving a bonus or additional payment near the end of the tax year, regardless of the tax year. This could be a lump sum payment as a freelancer or a holiday bonus from your employer. Why are the payments being postponed until the next year? Your tax obligation on this additional income will be postponed until the next tax year.

  1. Make Strategic Business Investments

If you purchase additional office supplies, a computer, or a new desk for the upcoming year, you can deduct a sizable amount if you do so before the year ends. To save money on taxes now and ensure you have the supplies you need in time for the upcoming year, think about making large business purchases before the end of the year.

  1. Increase Your HSA Contribution

In case your medical insurance plan has a higher deductible, you have the option to make additional contributions to your health savings account (HSA). You can deduct your HSA contributions from your taxes and use them to cover essential medical costs. Your health insurance plan must have high deductibles that either match or exceed the IRS’s required amounts, and it must have the highest annual out-of-pocket cost ceilings that comply with IRS regulations for you to be eligible for an HSA.

  1. Learn More About Tax Credits

Your tax liability can be reduced by a variety of tax credits. To mention a few, there is the American Opportunity Tax Credit, Child Tax Credit, and Earning Income Tax Credit. To minimize your tax liability and claim all of the available tax credits, it’s critical to conduct some research or consult with a tax professional.

Raeesa Sayyad
Published by
Raeesa Sayyad

Recent Posts

Entrepreneur Syed Usama Bukhari, aka Syeddubai thrives on innovations and a strong self-belief

As a branding expert, PR manager, and rising name in real estate and automobile, Syeddubai… Read More

18 hours ago

Clever Fox Publishing Invites You to Discover the joy of parenting with Give Your Child Wings by Swati Gupta

Even though parenting is described as one of the most rewarding journeys, it is indeed… Read More

19 hours ago

Matthew Denegre on the Art of Deal Sourcing: Finding the Right Investment Opportunities

Successful deal sourcing is a cornerstone of investment planning, influencing everything from the quality of… Read More

23 hours ago

Gregory Thoke’s Top Ski Resorts in Fort Collins, Colorado

Fort Collins, Colorado, is a gateway to unforgettable winter experiences, offering an ideal blend of… Read More

23 hours ago

David Kircus: Building a Winning Sales Team Using a Professional Athlete Mentality

Success in sales and professional sports share striking similarities, from the mindset required to the… Read More

1 day ago

LGCT Debuts on Gate.io: Legacy Network Scales Gamified, AI-Powered Learning Globally

As blockchain continues to shape new frontiers across industries, few sectors are as ripe for… Read More

2 days ago