Saving on taxes is a top goal that a Virginia tax attorney can try to help you achieve. While there are plenty of things you can do in April to try to save on your tax bill and send less money to the IRS, there's also no reason to wait for April to begin taking steps to keep your hard-earned cash in your own pocket instead of giving it to the government. Do these seven things now to start the process of saving on your taxes.
7 Key Steps That Will Help Slash Your Tax Bill
Seven key things that you can do now, during the summer months, to get on the path towards saving in April include:
- Taking another look at last year's return. If you spot errors, it is not too late to send in an amended return. If you don't see any mistakes but you note that some of your deductions you took weren't allowed since you didn't document them, you'll want to make a note of the problem and make sure everything is in order this year. Looking at last year's return will also give you an idea of whether you owed taxes or got a big refund so you can make adjustments this year.
- Confirm you're contributing to a retirement account; You should invest in a 401(k) if you've got access to one at work, and you should make sure you contribute at least as much to that 401(k) as your employer will match. You should also take advantage not just of the tax breaks for 401(k) investing but also of any tax breaks for retirement savings. For example, you could invest in an IRA in addition to or instead of a 401(k).
- Check out the rules for withdrawals: For certain kinds of retirement accounts, required minimum distributions (RMDs) are mandated by law. If you don't take required minimum distributions, you could face a tax penalty.
- Fund an account to cover health costs: Invest in your flexible spending account (FSA) through work or invest in your health savings account (HSA) if you have a qualifying high deductible health plan. These accounts let you pay for healthcare expenditures with pre-tax funds.
- Adjust your withholding: You can change your W-4 form that lets your employer know how much to withhold from your paycheck. If you now need more money withheld because circumstances changed, alert your employer. On the other hand, if you were getting a big refund, you may want to adjust withholding so you stop giving the IRS an interest-free loan.
- Make any necessary estimated payments: If you have non-wage income, you're still subject to pay-as-you go rules and need to send estimated quarterly payments to the IRS. Two such payments should have already been made and the next is upcoming.
- See your tax professional: You can talk with your tax professional during the slower seasons of June and July so you can get personalized answers to your questions.
Tax attorney Kevin Thorn can explain all of the different steps that are best for you to take in your particular situation. Give us a call to find out more.
