The new year is right around the corner, and you may be thinking about how to make 2020 the best one yet. It certainly would be a little easier to have a little extra money in your pocket, wouldn’t it?
If you can teach yourself how to save on taxes in 2020, you can do just that. No matter what your particular tax situation is, you can cut corners and save cash in the new year. With the right strategies in place, you’ll be shocked by how much money you can save.
Read on and we’ll walk you through what you need to know.
1. Contribute to Your Retirement Accounts
Want to know how best to plan for your future AND save money while you do it? Contributing money to your retirement account is that exact way. You have all the way up until mid-April of 2020 to make a contribution to any kind of IRA or Roth IRA account.
The money you put into this account can grow immensely over a long period of time. But, it can also help limit the amount of taxes you’ll pay this year. The money you put into a retirement account becomes nontaxable income, which means you can deduct those contributions from your tax total.
There is a maximum contribution you can make each year (about $6,000), but that shouldn’t stop you from reaching that amount if you can.
2. Get Your Records Organized
The proper organization won’t necessarily take thousands off of your taxes. But it might help. It can be a hassle getting all of your documentation together, like your 1099s and W2s. But ensuring you have everything together can help to make sure you get the discounts and deductions you need.
Lost paperwork could be an opportunity for savings that you’ve now forgone. You can print a w2 form online or take other steps to ensure you are organized.
3. Itemize Your Tax Deductions
Is it easier to take the standard deduction while doing your taxes? Yes, of course, it is. But doing so might cost you significant money you might be saving by itemizing your deductions.
If you think your deductions might add up to more than $12k, it’s definitely worth going the itemized route. Otherwise, you’ll be losing cash that is rightfully yours.
4. Claim a Home Office
How often do you work from home? You might be able to claim a home office deduction. The rules for eligibility when it comes to a home office have been loosened in recent years.
If you use one of the rooms in your home as an office, you should be allowed to go ahead and write expenses to that room off of your taxes. If you are self-employed, this is a great way to save a little money in 2020.
How to Save on Taxes Next Year
The above tips and tricks can help you to determine how to save on taxes when filing in 2020. Integrating these tips can make it much less painful when you hand money over to the IRS.
Need more personal finance tips? Check out the rest of our blog for more.