Cutting Your Taxes for Next Year
Know your tax bracket
Use retirement accounts
Consider starting a small business
Don't trade capital assets outside of retirement accounts
Buy a home - if you want one
Track your expenses
Know your tax bracket
Try to keep your income within a certain tax bracket
Look into tax-exempt bonds if you're in a high tax bracket
Use retirement accounts
Look into starting or expanding your contribution to an IRA, 401(k), 403(b), Keogh or SEP retirement account
Retirement accounts reduce your taxable income while allowing you to save for retirement
Consider starting a part-time small business
Consider starting an unincorporated, Schedule C business
May be a good way for a spouse to work and stay active
Losses from the business reduce your taxable income
This may be a way to turn your hobby into a tax-deductible business
Watch out for hobby-loss rules
Don't trade capital assets outside of retirement accounts
Trading securities subjects you to capital gains taxes
If you want to trade securities, do it inside your tax-sheltered retirement account
Buy a home - if you want one
Mortgage interest and property taxes are tax deductible
Buy a home because you want one, not just for supposed tax savings
Track your expenses
Track your expenses, especially potentially deductible expenses
- medical
- charity
- mortgage interest
- investment interest
- state and local taxes
- unreimbursed job expenses
Spending records will tickle your memory at tax time, and provide documentation for IRS