There are many handy tax planning tips that can let you pay less come tax time. Some are things you can do to help put money aside, while other tax planning tips involve things to be on the lookout for before it comes time to fill in those tax forms. Here are a few tips that can help you have to pay out less when it comes time to file your yearly taxes.
Simple Tax Planning Tips to Put In Place Now
One of the most important tax planning tips is to make sure that you put every penny you can into all of your retirement accounts before the end of the year. This income is typically not taxed now, making it easy to put money aside for when you retire, without having to pay taxes on it twice.
If you are age 70 or higher, another tax planning tip is to pay close attention to the distributions from your IRA. Because there is a required amount you must withdraw every single year to avoid that horrible penalty, you need to make sure you make that minimum withdrawal and keep your money in your pocket. The last thing you want is to pay someone else to keep your money simply because you forgot to take it out like you were supposed to.
Finally, one of the most forgotten about tax planning tips is to make sure you adjust your flex accounts to only hold what you realistically use each year. If you have been putting money into a flex account this year, make sure you use it up before the end of the year so that you do not forfeit any that is leftover. While this is a great way to put aside income and not have to pay taxes on it, it can also be quite expensive if you forget to use it up before the end of the year.