by Jeffrey McKinney
January 28, 2025
Take advantage of many options to potentially help reduce what you pay in taxes to the IRS this year.
With the arrival of 2025, many people who owe money are preparing to file 2024 tax returns.
However, the uplifting news about that unpleasant experience is that there are many steps you can take now to lower taxes, avoid penalties, and save money.
The Internal Revenue Service anticipates that over 140 million individual tax returns for the 2024 tax year will be filed before the April 15 federal deadline. More than 50% of all tax returns filed this year are expected to come with the help of a tax professional. The IRS encourages people to use a reliable tax expert to deter scams.
You might also want to have a tax expert or financial advisor review your return before filing, though it might be an extra expense for accuracy and thoroughness. Based on research, here are ways to potentially help reduce the amount paid.
- Fully exploit your deductions.
Deductions can be pivotal in helping trim your taxable income, so try to benefit by leveraging all the deductions offered to you. That could, for example, include mortgage interest and medical expenses. And charitable contributions. Those write-offs can help significantly reduce the amount owed.
- Contribute to retirement accounts.
Contribute the highest amount permitted to a 401(k) or traditional IRA to help decrease your taxable income. That can assist in lowering your tax bill.
- Research and find tax credits you might be eligible for
The IRS discloses a tax credit, which is the amount taxpayers can claim on their tax return to lower their income tax owed on a dollar-for-dollar basis. Eligible taxpayers can use tax credits to cut their tax bills and boost their refunds. You can explore more details online, check with a tax expert, use tax software, or visit the IRS to find a list of tax credits and see if you qualify.
- Utilize self-employment deductions if you qualify.
You may be eligible for deductions if you are self-employed. You can subtract expenses tied to your business. That could include equipment, travel, health insurance premiums, and office space. Ask a tax expert what other withdrawals might be available.
- Examine contributing to an HSA or FSA.
Health savings accounts (HSAs) and flexible spending accounts (FSAs) can both offer tax benefits. For instance, contributions to an HSA are tax-deductible. With an FSA, you can apply pre-tax dollars to pay for medical expenses not paid off by insurance. That can cut taxable income.
This technique allows you to offset capital gains on an investment, such as artwork, with capital losses. You can use the money from the sale to buy an investment that matches a part of your portfolio. Be sure to work with a financial advisor on this one.
- Check online to get more information on reducing tax debt
Several sites help trim tax expenses, including this one and another here.
To gain more information on filing taxes, including getting refunds, go here.
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