Most of you have probably just wrapped up your 2018 taxes, hopefully with a welcome tax return. Instead of forgetting about taxes until next April, you might focus....
upon ways to increase your 2019 tax return by taking advantage of both old and new tax rules. Check out these 2019 tax tips to jump start planning for next year's tax season. Like most financial planning suggestions, you'll have better results if you start early.
Three Basic Tips to Increase Your 2019 Tax Return
Get the tax refund you deserve next year by acting on some of these 2019 tax tips:
1. Reduce taxable income
You don't have to reduce your overall income in order to lower your taxable income. Consider deductible contributions to a 401K, IRA, 529, or HSA. These accounts can help you save money for retirement, college, or health expenses. At the same time, contributions may lower taxable income. One of the best ways to make sure this works out for you is to ask your account provider for automated deductions. This will ensure that you don't miss making periodic payments.
2. Adjust tax withholding
This suggestion won't actually lower your overall taxes. At the same time, it will help ensure a lower tax bill or larger refund when you file your 2019 taxes in 2020.
- At work, you might reduce the number of dependents used to calculate withholding.
- If you take taxable income from an account, you might opt to withhold a larger percentage to save for taxes.
- If you're self-employed, be sure to file quarterly tax payments, so you don't get stuck with a huge bill and potential payments. Also, don't overlook the home-office deduction if you qualify/
Tax credits and tax deductions seem similar but work differently. Deductions reduce your taxable income, thus lowering your tax bill. On the other hand, tax credits help pay your tax bill. Taxpayers often qualify for such deductions as those on mortgage interest, property tax, charitable contributions, and student loan interest. Popular tax credits include the Earned Income and American Opportunity credits. Explore all the available tax credits and deductions on the IRS website.
Don't Hesitate to Get Help With Taxes Early
Even if you choose to do your own taxes online, you have probably noticed that most tax services also offer online or phone help with taxes from a qualified professional. You can benefit by seeking assistance from either local or remote tax preparers early in several ways:
- During the off-season for tax preparers, it's easier to book an appointment. Also, many will offer specials to attract more business during a slow time.
- Many strategies to reduce taxes work better if you implement them early. For instance, you'll probably add a lot more money to your qualified retirement account if you start making regular payments in the spring than if you wait until the end of the year.
- If you can't avoid owing taxes, that won't be good news, but it's still better to learn in advance. You can seek financial assistance or debt help early, rather than in a panic at the last minute. If you don't have the money to pay taxes, there may be several options for you to consider.
Develop Prudent Plans for Your 2019 Tax Return
You might look forward to your tax return, but it's hardly free money. It's typically either a refund for taxes you already paid or for other investments towards such essentials as savings, education, and health. To improve your financial health, you may want to consider allocating some of this cash towards your debt settlement program, which may reduce the length of your program and may even mean you are able to take advantage of a better settlement...quicker.
You could also put a portion of your return towards an emergency fund or add money to a qualified account that will help you plan for the future and save even more money on future tax returns. In any case, learning to manage your taxes and your tax return is a big step you can take towards handling all of your finances better.