Ways to lower your tax burden tomorrow (and the day after)

Looking ahead to next year’s tax season, you can probably keep your tax burden pretty low if you really understand tax law. And let’s be honest—who does? Tax law is really only valuable in a snowy apocalypse:

For those of us who don’t know Jack (Hall) about it, here are some strategies we can use to lower our tax burden…

Contribute to retirement accounts: If you maximize your contributions to tax-advantaged retirement accounts such as 401(k)s, IRAs, etc., you can reduce taxable income, which will lower your tax bill.

Find tax credits: Look for relevant tax credits to reduce your tax liability. For example, credits like the Earned Income Tax Credit (EITC), Child Tax Credit (CTC), and education-related credits can provide a good bit of savings.

Itemize or take a standard deduction: Rarely has itemizing paid off for me, but you might have more luck. Compare how it shakes out each way for you to see which method results in lower taxes. Deductible expenses can include mortgage interest, property taxes, state and local taxes (up to a limit), charitable contributions, and certain medical expenses.

Utilize Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs): Contribute to HSAs if you have a high-deductible health plan. HSAs offer triple tax benefits—contributions are tax-deductible, earnings grow tax-free, and withdrawals for qualified medical expenses are tax-free. FSAs allow you to use pre-tax dollars to pay for eligible medical expenses, reducing taxable income.

Seek the help of a pro: Tax law changes frequently, so staying informed about current tax rules and seeking advice from tax professionals can help you identify additional tax-saving opportunities and ensure compliance with tax law. Also, professionals see tax law as more than a way to keep warm The Day After Tomorrow.