The Empowered Tax Payer: Smart Moves for Financial Freedom

Financial freedom is pretty much everyone’s end goal, right? You may not realize it, but your tax strategy can actually help you achieve this dream. Today, I’m going to share a few ways you can make taxes work for you instead of struggling to figure them out yourself.

Maximize the Hell Out of Those Deductions and Credits

You’re leaving money on the table if you aren’t taking full advantage of all the tax credits and deductions available. Chances are, you know about the main ones, but did you know things like expenses incurred while volunteering could count as out-of-pocket charitable contributions?

Here’s where it pays to have a tax expert on your side. They can help you figure out exactly what you’re eligible for and where you’re missing out.

Boost Your Retirement Accounts

Are you contributing to your retirement accounts? If you’ve always considered 401(k)s and IRAs as a side thought, it’s time to take another look. These retirement accounts are a smart option, tax-wise. When used properly, they help you build long-term wealth while reducing your taxable income.

Most retirement funds allow you to contribute with pre-tax dollars, so you actually deduct them from your gross income. Depending on your income, this can put you in a lower tax bracket, while still preserving that money for the future.

Roth IRAs do use after-tax dollars, but your qualified withdrawals later on are tax-free, including what your investment has earned. If you expect to be in a higher tax bracket during retirement, this is a good investment to consider. Think of your future self when planning your investments.

Don’t Forget to Plan (Tax-Efficiently, Of Course)

As you go into the new year, it’s time to plan ahead. Make sure your investments and spending are tax-efficient now and you’ll see big improvements next tax season! When it comes to tax strategies, talking to your tax expert is the best way to find all the hidden methods of keeping more money for yourself.

Investing in stocks? Make sure you check the poorly performing ones if you expect to report significant gains . . . it could save you some money come tax time. And if you’re putting money into municipal bonds, don’t forget that they’re usually more tax-efficient than other options. Municipal bonds may be exempt from federal taxes if you live in the issuing state.

As they say, failing to plan is planning to fail. So talk to your tax expert and start getting your ducks in a row.

Stay Organized

Seriously, this is probably the biggest tip for reaching financial freedom. Missed payments, late fees, and forgotten deductions can end up costing you a lot more than you think. All that money is just flushed down the toilet if you don’t realize what’s going on!

Staying on top of your financial records is key to reaching your goals. There are so many apps and online tools to help with this now that you really have no excuse. Take some time this January to set yourself up for success and plan to review your financial status quarterly.

Need a Hand?

It can be overwhelming to stay on top of your finances and taxes. Financial freedom can feel pretty far away when you’re struggling to get through the darn tax forms, so remember, outsourcing is a sign of strength. You hire experts to work on your car and fix your plumbing, so why not hire a tax expert to manage your taxes? It saves you time and frustration and can set you on the path to fulfilling your dreams.

Ready for some help? Contact Ask Anna Tax today.