With 2014 over and 2015 well on its way you may be finding yourself gathering all of your 2014 tax information and getting ready to file your income taxes. Some folks will be expecting refunds while others will woefully dread writing out a check to the IRS.
If you find yourself in the group of folks that will be writing a check to Uncle Sam, here are some tips to reduce your tax burden for 2015.
- Contribute more to your 401(k). These contributions are put into your plan before being taxed. This is win-win. It lowers the amount of your taxable income and potentially reduces the amount you may owe at tax time while increasing your retirement savings.
- Take advantage of a deductible IRA contribution. If eligible, you can also reduce your taxable income by contribution to your IRA. Generally, your deduction may be reduced or eliminated if you’re already taking advantage of step 1.
- Increase your withholding. By changing the amount withheld from your paycheck you may be able to decrease, if not eliminate what you owe at tax time. The IRS has a withholding calculator found here that takes the guess work out of how much to withhold and how much of your paycheck goes to you.
- Make your home energy efficient. By investing in improving your home’s energy consumption you may be able to take advantage of tax credits that can lower your overall tax bill. To see if you may qualify, click here.
- Start or increase your charitable giving. It not only feels good to give and to help others, but the IRS also provides some tax breaks for charitable givers. From giving to your church to donating items to the local charitable foundation you can take advantage of these tax deductions. More information on what organizations and items that qualify can be found here.