Tips to wade through holiday tax pitfalls
The holiday season is here and people are hustling and bustling all around. Trimming the spruce, checking off shopping lists, wrapping gifts, and celebrating with loved ones. Taxes are the least of everyone’s worries. Even though it is the perfect time for people to look at their financial tips to wade through holiday tax pitfalls.
Taking the time to take a closer look at your tax-planning list, and checking it twice, could help you steer clear of the holiday tax pitfalls and minimize tax liabilities at year-end. As our gift to you this holiday season, we’ve listed down the most common holiday tax pitfalls and along with it are some tips to help you wade through it!
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Count your kids
Most people with children don’t file for their child credit tax which could serve them well. If you’re a taxpayer that has kids, it will do you well to inform the IRS that you are raising children. The child tax credit has doubled for the past years for each dependent under the age of 17, making this a critical tax savings area for clients with children. The higher tax credit also benefits more people, since it does not phase out until their income exceeds the threshold placed by the IRS.
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Maximize your retirement fund
Ignoring your retirement fund is one of the major tax pitfalls during the holidays. Sometimes you get engulfed by your spending spree that you might forget to set aside some money for your retirement fund or more commonly known as 401(K)s. Maximizing your 401(k) contributions by year-end can help reduce your taxable income. For taxpayers ages 50 and older, contribution limits for IRAs and 401(k)s are even higher. These higher limits help clients build up their retirement nest egg and can help reduce taxable income.
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Health is wealth
One pitfall to look out for is if you are a participant in a high deductible health plan. You can actually contribute a substantial amount to a health savings account. Health savings account contributions are tax-deductible, and the money can be withdrawn tax-free to pay for a variety of medical expenses. Importantly, if the money is not used, the account balance continues to grow tax-free.
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The gift of giving
Feeling altruistic during the holiday season? There’s nothing wrong with that. What’s wrong is finding yourself in this holiday tax pitfall where you don’t include your charitable donations in your tax report.
Takeaways
If you do your taxes personally, you will find yourself in need of a lot of tax rules and guidelines coverage. The tremendous information that you should keep in mind to fully maximize your tax return can bring a lot of stress to an individual. Lucky for you, there is someone who can take the weight of tax preparation off of your shoulders! Send FAS a message today and we’ll discuss how we can help you make sure that no stone is left unturned with your tax reporting!
