Many people don’t think about their taxes until it’s time to file, a mistake that could increase your liability and cause you to turn over more of your income to the IRS. A year-round tax-planning strategy can reduce your exposure, allowing you to keep more of your own money by maximizing deductions or qualifying for a lower tax bracket. Below are just a few common strategies your tax advisor might recommend.

4 Strategies for Lowering Your Tax Bill

1. Splitting Income

The IRS sets your tax rate based on your net income, which you can counteract by splitting money you earn between several different family members or business entities. By separating your revenue streams, each individual may qualify for a lower tax bracket, reducing your burden when it’s time to file. This strategy is especially useful for small business owners or self-employed contractors.

2. Deferring Income

If you’re expecting a big year-end bonus or large payment, find a way to have it delivered in January if you expect to earn less than next. Or, if you think you’ll make more next year, you can push to have payments delivered early to avoid increasing the next season’s tax bill.

3. Maximizing Retirement Contributions

Opening a tax-deferred retirement account is an excellent way to reduce your taxes, especially if you contribute the maximum amount allowable every year. With a 401(k), you won’t be taxed until you withdraw the funds after retirement.

4. Taking Advantage of Deductions

A skilled tax advisor can help you find deductions for purchases you planned to make anyway, such as a vacation house or home improvements. The timing of these purchases can have a dramatic impact on your taxes for years to come.

The tax advisors at Sharrard McGee & Co PA have been providing high-quality advice and effective strategies to individuals and business owners throughout High Point and Greensboro, NC, for over 40 years, combining the personalized attention of a boutique firm with the expertise of a large company. Visit their website to learn more about their tax advising services, and follow their Facebook for updates. To talk to a tax advisor in High Point, call (336) 884-0410 now, or dial (336) 272-9777 to reach their office in Greensboro.