7 Tax Tips for 2023 to Save Your Family Money
The new year is just around the corner, and it’s time to start thinking about taxes and saving your family money. Tax season can be overwhelming, but with the right strategy, it doesn’t have to be.
With a few smart moves, you can save your family money in 2022 and keep more of your hard-earned cash. At Cook CPA Group, we ensure our clients never pay more in tax than they have to. That’s why we’ve put together this post with seven tax tips you can leverage to save your family money this upcoming tax season.
Read on to learn the seven tax tips you must know to save money this year:
1. Take Advantage of Tax Credits
Tax credits are one of the best ways to save money on taxes. There are various tax credits available for families with children, low-income households, and new homeowner tax credits. It’s important to familiarize yourself with the different tax credits available and take advantage of those that apply to you.
For example, if you qualify for certain credits, such as the Earned Income Credit, you can reduce your tax bill significantly. Here are a few tax credits available for families to get you started:
2. Contribute to a Retirement Plan
Contributing to a retirement plan is a great way to save money on taxes. Most retirement plans have tax-deferred contributions, meaning you don’t have to pay taxes on the money you contribute until you start withdrawing it. This can help you save money in the long run.
Contributing to a 401k (if your employer provides such a benefit) or a traditional or Roth IRA can help lower your taxable income and reduce the amount of taxes you owe. While it may be daunting to open up a retirement account with all the options available to investors, you should know that the earlier you start contributing to a retirement plan, the more you’ll be able to save.
If you need additional guidance on contributing to your employer-sponsored 401k or setting up an IRA account for you or a member of your household, don’t hesitate to reach out to us. We can help inform you of the tax advantages of setting up these financial accounts.
3. Take Advantage of Deductions
Deductions are another great way to save money on your taxes this year. Deductions reduce your taxable income, which can help decrease the amount of taxes you owe. There are a variety of deductions available, including deductions for medical expenses, charitable donations, and business expenses.
It’s important to do your research and determine which deductions you may qualify for. Here are a few articles to help you get started on researching tax-saving deductions:
- 5 Child and Dependent Expenses You Can Deduct From Your Taxes This Year
- Write Off These Home Improvements To Save Money This Tax Season
- 6 Medical Expenses You Didn’t Know Were Deductible
4. Set Up a 529 Plan
A 529 plan is a college savings plan that allows you to save money for your child’s college education on a tax-deferred basis. Contributions to a 529 plan are tax-deductible, and the money can be used for a variety of college expenses, including costly books and materials.
Setting up a 529 plan is a great way to save for your child’s future. If you have children in college or have a college-bound child, check out this article to learn more ways you can save money:
5. Make Charitable Donations
Donating to a charity can help you save money on your taxes. Any donations you make to a qualified charity are tax-deductible, meaning you can deduct them from your taxable income.
You can use the money you save through your charitable donations to invest in other tax-saving strategies like retirement plan contributions or tax-deductible gifts to your children.
6. Invest in a Tax-Advantaged Savings Account
Tax-advantaged savings accounts can help you save money on your taxes. These accounts, including Roth IRAs and Health Savings Accounts (HSAs), allow you to save money while earning interest. The money you contribute to these accounts is not taxed, meaning you can save more money for your family over time.
To learn more about setting up an HSA or Roth IRA, contact us today. We will explain the differences between these tax-advantaged savings accounts to help you decide which plan makes the most sense for your current and future financial goals.
7. File Your Taxes Early
Filing your taxes early can help you save money on your taxes. And no, we aren’t just saying that because we’re expert tax professionals! By filing your taxes early, you ensure you receive any potential refund sooner while avoiding any late filing penalties.
Every penny counts when your goal is to save money during tax time. The tax professionals at Cook CPA Group are committed to ensuring you never pay more taxes than you have to.
Filing your taxes with the right accounting firm means you are always financially prepared. Planning your tax filing ahead of the deadline guarantees you won’t be surprised by any last-minute filings.