You can use tax credits and deductions to lower your tax liability, but you can also lower your taxes by using tax tips throughout the year. Here are a few:
Contribute more to your retirement savings – A good way to lower your tax bill is to begin contributing more to your IRA and other retirement accounts. Make sure you check the details of any retirement account you have; you may be able to deduct some or all of your contributions. That will reduce your taxable income because the amount you contribute will not be counted as taxable income.
Check your withholdings – You should check your withholdings if you received a big tax refund. If you are an employee, it likely means that you are withholding more than required. Paying too much in taxes is like giving a free loan to the government. If you withhold less, you get to keep more in your pocket throughout the year.
Account for job-hunting expenses – If you look for a job when you are unemployed, you can deduct the expenses incurred for transportation, food, and resume costs. Just keep in mind that if you are looking for a job in a new or different field of work, you cannot deduct job-hunting expenses.
Make charitable donations – If you make a charitable donation, remember to make it to a recognized charity to get the tax benefits.
Cost of moving to a new job – You can deduct the cost of the move if your new job is 50 miles or farther than your home and your old job.
There are other deductions as well such as those for a home computer used for business. Be sure to thoroughly research you options to save on taxes during the year that can really help on your next tax return.
For help with any income tax question and the new reporting rules, please call one of our offices:
Plymouth 734.454.4100, Allen Park 313.388.7180,
Grayling 989.348.4055, Livonia 734-462-6161,
Royal Oak 248.399.7331, or St. Clair Shores 313.371.6600