How to lower your taxes?

A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer by a governmental institution in order to fund government spending and various public expenditure. A failure to pay, along with evasion of or resistance to taxation, is punishable by law.

As the U.S. federal, state, and local governments, as well as countries around the world, continue to implement measures to support their economies amid the Coronavirus (COVID-19) pandemic, we are providing trusted analysis of the latest Coronavirus tax policy development to better assist you.

1. Leverage per-tax savings. Take advantage of opportunities to set aside income on a pre-tax basis.

2. Defer or accelerate income and expenses. Depending on your yearly goals think whether it is better to reduce taxable income in this year or the next. Some tax year are more advantageous than others, you can defer income into a subsequent tax year and accelerate deductible expenses into the current year. Or if you believe tax rates will be higher next year you could move as much income into the current year and defer expenses.

3. Harvest gains and losses. Every year you can use up to $3,000 in investment losses to offset ordinary income. Any donation of appreciated stock can avoid paying tax. It is called the netting rules, when used efficiently you can avoid paying taxes on investment gains and losses.

4. Maximize your tax exempt and deferred investment. The higher your tax bracket the more tax savings you will realize with tax exempt and tax deferred contributions such as employer 401(k)s.

5. Avoid penalties. The IRS has increased the cost for penalties, for example the minimum for failure to file has increased from $100 in 2009 to $435 in 2020. So get your tax in order and avoid costly penalties and interest charges.

If you need your taxes done contact us, the longer you wait the higher the interest.