As tax season begins, you may be wondering about what you can do to make filing your taxes less stressful or whether there’s anything you can do to keep more of your income legally. You’re not the only one, and if you’re reading this, you’re in luck. Here are three basic tax strategies that everyone should know:
- Decide whether to take the standard deduction or itemize. Congress sets the amount of the standard deduction, usually adjusting for inflation every year. This is a flat amount, and it helps you prepare your taxes faster. But if you’re more concerned about saving money than saving time, choosing to itemize is better if your itemized deductions are more than the standard deduction. This requires you to keep track of these expenses throughout the year, however.
- Find out which tax credits you qualify for. Tax credits are considered even more beneficial than tax deductions. Whereas deductions reduce your taxable income, tax credits directly reduce the amount of tax you owe. Take a look at some common tax credits and find out which ones apply to you, such as the child tax credit, lifetime learning credit, and more.
- Contribute to an IRA. With tax time quickly approaching, you might be worried that there are few things you can do at this point to lower your taxes, but that’s not the case. One of the best last-minute tax strategies is to contribute to an IRA, or individual retirement account. The best part is that it is tax free until you start making withdrawals.
Planning Bucket helps connect many people with the financial professionals most suited to their needs, including professionals who can provide their expertise when it comes to tax strategies. Reach out today to get introduced to a qualified and vetted advisor in North Carolina.