Most people overpay on taxes simply because they don't know all the legal ways to reduce their bill. Here are 10 strategies to keep more of your money.
1. Maximize Retirement Contributions
401(k) and traditional IRA contributions reduce your taxable income dollar-for-dollar.
2. Use Health Savings Accounts (HSAs)
Triple tax advantage: tax-deductible contributions, tax-free growth, tax-free withdrawals for medical expenses.
3. Harvest Tax Losses
Sell losing investments to offset gains. You can deduct up to $3,000 in net losses against ordinary income.
4. Bunch Deductions
If you're close to the standard deduction threshold, bunch two years of charitable donations into one year.
5. Contribute to 529 Plans
Many states offer tax deductions for contributions to education savings plans.
6. Claim All Eligible Credits
Don't miss: Child Tax Credit, Earned Income Credit, Education Credits, Energy Credits.
7. Deduct Home Office Expenses
If you're self-employed and work from home, you may qualify for the home office deduction.
8. Time Your Income
If possible, defer bonuses or income to a year when you'll be in a lower tax bracket.
9. Give Appreciated Stock
Donate appreciated securities instead of cash to avoid capital gains tax while getting the full deduction.
10. Review Your Withholding
Adjust W-4 to avoid giving the government an interest-free loan (or owing a big bill).
Michael Rodriguez
CTO & Data Analyst
A financial expert dedicated to helping people achieve their financial goals through practical advice and proven strategies.