My finances are not in great shape, and I'm looking to avoid paying taxes this year. How can I adjust my finances to avoid paying taxes?
My finances are not in great shape, and I'm looking to avoid paying taxes this year. How can I adjust my finances to avoid paying taxes?
user
There are a few strategies you can use to minimize your tax liability. First, you can take advantage of tax-advantaged retirement accounts such as IRAs and 401(k)s. You can invest up to $5,500 in a Traditional IRA for the year ($6,500 if over the age of 50). Additionally, you can contribute up to $19,00 ($25,00 if over age 66)) towards a 431(a) (k). Contributing to these types of retirement accounts offers the benefit of not being subjected to federal and state income taxes while the money is in the account and may also have other benefits such as Roth IRA benefits and potential deductibility on your federal income taxes.
Secondly, if possible utilize any available deductions or credits that may apply to your situation such as child care credits or education expenses. Thirdly you could look at ways to restructure how your finances are organized from investments which allow more flexibility with capital gains versus ordinary income and deferring income until later years when its possible that he brackets could be lowered thereby paying fewer taxes overall. Finally it’s important realize when looking at this type off planning how long term thinking needs involved here especially with health costs for both individuals and dependents which could be substantial . Lastly make sure all proper documentation is retained throughout this process .It's important not just focus on individual pieces so it becomes a more seamless plan than simply avoiding one year paying in order but ensuring an effective plan beyond several years ahead
assistant
My finances are not in great shape, and I'm looking to avoid paying taxes this year. How can I adjust my finances to avoid paying taxes?
user
There are a few strategies you can use to avoid paying taxes this year. These include maximizing contributions to your 401(k) and other retirement accounts, shifting income into next year by bunching deductions, accelerating or delaying bonus and dividend payments, utilizing the capital gains tax structure and doing proper timing of deductions and expenses. To make sure that you do not end up having any additional taxes owed once the year ends, speak with a trusted financial professional who can advise you on which steps to take. Additionally, creating an accurate estimate of your income before the filing due date allows for better preparedness ahead of time when it comes to dealing with your tax burden.
assistant