Taxes are an obligation that you do not want to have to deal with more than once a year, even though the best tax advice says taxes should be on your mind throughout the entire year. Consider these tax saving tips as you plan for the financial year ahead. If your tax planning did not turn out as you hoped this year, there are steps you can take to mitigate the expenses incurred a structured settlement for cash can assist with making up any shortfalls.
Don’t Miss Deductions
Valid deductions are a good way to save money on your taxes, but it’s easy to miss some as you prepare your annual tax paperwork. While many deductions are commonly known others are less so. Be certain to check with a finance professional if you have questions regarding your eligibility for specific deductions.
You may be able to deduct a percentage of healthcare premiums if you pay them in part with after-tax funds. Self-employed individuals who are not eligible for a spouse’s benefits have the threshold on healthcare premiums waived. Consult your financial professional codes for guidance.
You may also be able to deduct some expenses if they exceed 2% of your Adjusted Gross Income, or AGI. Other expenses do not need to exceed this number. Examples include the interest paid on student loans, alimony, or moving expenses in the event of a work-related relocation over 50 miles from your current place of residence.
Other deductions can include:
- Travel costs for charity events
- Fees for refinancing a mortgage
- Costs for child care and babysitting
- Payments to financial advisors
Tax Planning Advice for the Year Ahead
Even when tax season is months away, you can still take steps to save money on taxes the next time you prepare them. Diligence throughout the year will pay dividends in the future.
Those expecting an end-of-year bonus may wish to see if it can be deferred until the New Year to avoid paying taxes in a higher bracket.
Contribute as much as possible to tax-deferred retirement savings accounts. The taxes on these funds won’t be due until you start withdrawing them after retirement, and deposits may even be tax-deductible. Familiarize yourself with contribution limits, laws, and restrictions to ensure you receive the maximum possible benefit from your contributions.
When choosing charitable donations, remember you can give more than cash. Donations of bonds, stock shares, mutual funds, or property may allow you to avoid paying capital gains on them. You may also be able to deduct their current market value from your taxes.
Parents can set up custodial accounts for their children under the age of 21. Some of the earnings on these funds may be exempt from taxes.
Financing the Unexpected at Tax Time
Tax season may bring unexpected expenses with it. Many Americans without adequate tax planning advice find themselves responsible for high bills they did not anticipate. If you discover you owe more than you can afford, selling structured settlement payments may provide you with the money you need to pay off your debt.
For more information on your options, contact Novation Settlement Solutions today.
*Novation is not a financial advisor or consultant and strongly recommends that you speak to a lawyer or accountant before making any significant financial decisions.