Tax Planning Tips to Aim to Minimize Savings Before April 15th
As the April 15th tax deadline approaches, now is the time to ensure you're taking advantage of every opportunity to potentially minimize your tax liability and avoid last-minute stress. Whether you're filing as an individual or a business, implementing smart tax planning strategies can help you save money and stay compliant with IRS regulations. Here are some essential tax tips to consider before the deadline.
Maximize Retirement Contributions
One of the best ways to reduce your taxable income is by contributing to tax-advantaged retirement accounts. If you haven't maxed out your contributions for the prior tax year, you can still make contributions until April 15th. We’ve compiled a summary of retirement plan contributions for 2024 & 2025 here. (https://flatwater.bank/investments/our-solutions/contribution-limits)
Review & Claim Deductions & Credits
Tax deductions reduce the amount of your income subject to tax while tax credits reduce your tax bill dollar by dollar. Here are some common ones to check:
- Student Loan Interest Deduction: You may deduct up to $2,500 in student loan interest.
- Medical Expenses Deduction: If your medical expenses exceed 7.5% of your adjusted gross income (AGI), you might be eligible for deductions.
- Education Credits: The American Opportunity Tax Credit (AOTC) and Lifetime Learning Credit (LLC) can help offset tuition and educational expenses.
- Child Tax Credit (CTC): If you have dependent children, you may be eligible for up to $2,000 per child.
- Earned Income Tax Credit (EITC): This credit benefits low- to moderate-income workers and can provide a substantial refund.
- W-2s and 1099s for income reporting.
- Receipts and records for deductible expenses.
- Bank and investment statements to report interest, dividends, and capital gains.
- $4,150 for individuals.
- $8,300 for families.
E-File for a Faster Refund
Filing electronically with direct deposit is the fastest way to receive your tax refund. The IRS typically processes electronic refunds within 21 days, compared to paper returns, which can take much longer.
Proper tax planning before April 15th can save you money and stress. By maximizing deductions, contributing to retirement accounts, organizing documents, and filing on time, you can ensure a smoother tax season. If your tax situation is complex, consulting a tax professional can help you identify additional tax-saving strategies and avoid costly mistakes.
Do you need help with specific tax planning strategies? Let’s discuss!