There is Still Time to Lower Next Year’s Tax Bill

There really is still time to do a few things that can alter the way your tax bill looks next year…if you act quickly. USA Today offered “Ten tips to lower your federal income tax bill before 2021 ends“.

Wait on that bonus
If it is possible, ask to get your year-end bonus next year. That way, it is not part of your income this year. We are often told not to pass along potential issues to the future. At the same time, it is also advisable to live in the moment. When it comes to paying less in taxes, you have to do what you can to play less on the very next tax bill. Once that is settled, you can continue to work on your financial growth to go even better in the future.

Give to others
One tried and true method to lower next year’s tax bill is donate to charity. And there are plenty of organizations that won’t think you are too late because they could really use the help.

Give to yourself
Making another contribution to a retirement account can make a difference. If you an afford it, you can pay your future self and save your present self from money now.

Use what you have
If you have money left in your FSA, spend it on qualifying expenses rather than letting it sit unused. Even if you can carry some over into the next year, why not used that money now since it is available?

Get credit for helping
If you didn’t already know, you can get a tax credit for helping those dependent on you, even if they are not your children. USA Today explains:
“Do you support your parents or grandparents? How about another loved one? If that happens to be you and they qualify as a non-child dependent, make sure to take advantage of the new “Other Dependent Credit.””

©Bring Clarity to Your Finances™. There is Still Time to Lower Next Year’s Tax Bill is a post from Bring Clarity to Your Finances™

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Claire Emory, MBA, CFA, CFP®

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