If this past April, when tax time rolled around, you felt like your tax bill was a little too big, make sure that you take steps this year to get your tax bill under control. Here are five different areas of tax law that you may want to consider looking into to get your tax bill under control.
#1 Property Taxes
It can be advantageous to pay this year's property taxes as well as next year's property taxes all at once. Paying two years of property taxes all at once can increase your property tax payment enough that you are able to itemize your tax deductions. This can allow you to save some money when your overall deduction is greater than the standard deduction amount.
Next, you need to look at how you make your mortgage payments. At the end of the year, instead of waiting till January to make your next mortgage payment, consider making your January payment in December. Making your mortgage payment ahead of time will increase the amount of interest that you paid this calendar year and that you can deduct from this year's taxes.
Another way to use your mortgage payments to decrease your tax burden is by increasing the amount of your mortgage payments. By increasing the amount of your mortgage payments each month, you can increase the amount of interest that you pay and thus increase the amount of mortgage interest you can deduct from your taxes.
Your retirement can pay you in more ways than one. Opening up an IRA and contributing the maximum amount to your IRA each year is a great way reduce your overall tax burden. Your IRA contributions can be used to reduce your income and thus reduce your overall tax burden. Depending on the amount that you contribute to your IRA and your income level, you may be able to actually reduce your income to a lower tax bracket.
Additionally, your IRA contributions can also help you save for your future as well, which is a great added business.
#4 Filing Statues
Finally, check your filing status as well. If you are married, sit down with a tax accountant and figure out if a joint return or filing separately makes the most financial sense. Sometimes, filing separately can be financial advantageous, especially when you have lots of miscellaneous deductions for a particular year. Don't always assume that filing together is the best choice; be sure to examine this choice every year to determine what makes the most financial sense for that financial year.
For more tips on improving your tax management, contact a local tax preparation company.Share