There are plenty of money-saving deductions within the tax code—you just need to know where to look! Even if you don’t itemize, you still have options. Unfortunately, a lot of people aren’t aware of the strategies available to them. These ideas can help.
Health and Education Tax Reductions
When individuals and families have qualified high deductible health insurance plans, they’re in a unique position to reduce what they owe come tax season. This comes from setting up a Health Savings Account (HSA) and then making contributions throughout the year.
The money put into these accounts won’t be counted toward your taxable income. What’s more, you’ll be able to put those non-taxable funds toward qualified medical, dental, and even vision care that you pay for out-of-pocket.
Currently, the annual limit for HSA contributions for single tax filers is $3,650 and $7,300 for married couples. And that limit is raised by $1,000 when you’re 55 or older.
Tracking your educational expenses is also a great idea for lowering your tax liability. Up to $2,500 of the interest you pay on student loans can be deducted on your return. This holds true even when someone else is helping you to make payments on the loan, because by co-signing on the loan, they’re also taking on a legal obligation for the debt. This is key. Parents often forget that they’re eligible for student loan deductions based on the payments they’re making.
Other Ways to Reduce Your Taxable Income
Contributions to various retirement tax plans, such as 401(k), 403(b), and SIMPLE IRA plans made available through employers will also reduce taxable income. The options don’t stop there, either. Other versions of IRAs are also eligible. It’s incredibly helpful to take full advance of the contribution limit for each plan annually. This is one of the best solutions for getting the most savings on your return—and prepare for the future along the way.
Now’s the Time to Get Ahead!
Everyone’s tax scenario is different, so it’s always a good idea to have a tax planner who takes the time to review every aspect of your life. And that’s exactly what our team is passionate about! We love helping individuals and families consider all of their options to lower their tax liability and stay on a path for financial success.
If you’d like to schedule your end-of-year tax planning session, or you’re simply due for an update or review of your previous years’ tax returns, please don’t hesitate to reach out! Our company is based in Fishers, Indiana and we partner with clients all throughout all 50 States. The strategies we develop now can make a significant difference in next year’s filing. Let’s talk!