Weekend Reading: How to Lower Your Tax Bill Next Year
This article appears as part of Casey Weade's Weekend Reading for Retirees series. Every Friday, Casey highlights four hand-picked articles on trending retirement topics and delivers them straight to your email inbox. Get on the list here.
A forward-looking tax strategy requires being proactive. To minimize your tax bill next year, you’ll want to consider employing tax efficient strategies for the remainder of 2023.READ THE ARTICLE
Some of those include:
📌 Lower your tax bill with deductions and credits: If your itemized deductions exceed the standard deduction, you can lower your tax bill. Common itemized deductions include charitable donations, mortgage interest, and state and local taxes. Tax credits can also lower your tax bill dollar-for-dollar.
📌 Pay estimated taxes (if you need to): If your taxes aren’t held throughout the year, you’ll likely pay estimated taxes every quarter (especially if you expect to owe $1,000 or more in federal taxes).
📌 Check retirement contributions: You can contribute up to $22,500 of tax-free income (until you make withdrawals) to retirement accounts. On the flip side, if you take withdrawals before age 59 ½, you’ll face a tax penalty.
📌 Look at federal income tax brackets for 2023 and check tax withholdings: Federal income tax brackets are increased for 2023 to account for inflation (up more than 7 percent from 2022). Be sure to note how and if this could impact your money, as well as reassess your tax withholdings for this year.
You will pay taxes throughout your entire life. In that light, the most effective tax strategy is one that’s a continuum; it’s often revisited and always focused on keeping more of your hard-earned dollars.