How To Reduce Your Taxes at the End of the Year

January 3, 2020

Who loves tax time? Even when you’re ready for it, it can feel like good old Uncle Sam is reaching in your back pocket when you’re not looking. Sure, taxes go to supporting necessary government programs, but losing hard-earned money is never easy. Therefore, Encino Tax Advisors suggest reducing your year-end tax bill by taking advantage of tax laws and capitalizing on refunds and deductions. Encino Tax Consultants will, at a minimum, inform you of four ways to minimize your taxes.

1. Tax Deductions

Any reputable Los Angeles Tax Preparation services will probably point to deductions as the primary source of tax reductions. Two ways this works well is to donate appreciated stock or property. If you have held a given asset for more than a year, then you can deduct the market value and avoid capital gains tax in the process.

2. Deferred Income

Is your company in the habit of giving year-end bonuses? Are you a freelancer with control over your billing? If you answered yes to either of these questions, then you can defer your income to reduce your tax bill at the end of the year. However, be careful because deferring your income might throw you into a higher tax bracket in the following year.

3. Offset Gains

Investing in stocks and bonds has often been a great way to have your money work for you. Unfortunately, when stocks or investments perform well, then your tax bill might be higher. Therefore, to offset positive gains, you can sell off potentially loser stocks.

4. Contribute to Retirement Accounts

Tax-deferred retirement accounts provide a great way to reduce your tax bill this year. By contributing the maximum to these accounts, you reduce your taxable income, lowering your tax bill.

If you are concerned about being in a higher tax bracket or are merely looking for ways to save money, then contact a local tax accountant or CPA. They will have more suggestions and can tailor a tax plan to your specific needs.