It’s Time To File Your Taxes! Are You Taking Advantage of These Key Incentives?
As the calendar flips to March, it’s time to file your taxes. Filing taxes isn’t just crunching numbers and filling out forms—it’s also an opportunity to take advantage of key tax incentives that can save you money.
In this article, we outline three incentives that all taxpayers should take advantage of, no matter their age or stage in life.
1. Reduce Your Taxes By Maxing Out Retirement Contributions.
Not only do retirement contributions help secure your financial future, but they also help with your taxes. Traditional IRA and 401(k) contributions are typically tax-deductible, reducing your taxable income for the year. On the other hand, Roth IRA contributions are made with after-tax dollars but offer tax-free withdrawals in retirement. Maxing out your contributions to your retirement accounts can result in substantial tax savings, especially for those in higher tax brackets.
2. Health Savings Accounts Are Powerful Tools For Reducing Your Tax Burden.
Health Savings Accounts (HSAs) allow you to set money aside to cover out-of-pocket medical expenses. Yet, they also provide enormous incentives for your taxes. HSAs offer a triple tax advantage because they’re tax-deductible, grow tax-free, and withdrawals for qualified medical expenses are also tax-free. This trifecta of tax benefits makes HSAs a powerful tool for managing healthcare costs while reducing your tax burden.
3. Strategic Charitable Giving & Itemized Deductions Provide Tax Advantages.
Charitable giving isn’t just an act of generosity but can also be a strategic move for your taxes when you itemize your deductions. Think about a cause you feel passionately about. Maybe it’s education, medical research, or helping those in your community. Once you identify the organizations you’d like to donate to, work with your financial planner and CPA to plan your giving to benefit your taxes the most.
Additionally, certain donations, such as appreciated assets or contributions to donor-advised funds, can offer even more significant tax advantages, including tax savings on capital gains and the ability to manage charitable giving over time.
Discuss Your Taxes & Navigate Incentives With Hess Financial In Harrisonburg.
We could go into so many more tax incentives—such as deferring income, education deductions, stock options, estate planning, and more—but we’ll leave that for another day.
The team at Hess Financial is happy to collaborate with your CPA, attorney, and other professionals you work with to help ensure that you’re minimizing your taxes and maximizing your wealth every year. Contact us to start your journey.
Disclaimer: This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.
