The summer is winding down and it’s time to get ready for the second half of the year!
September through December is often referred to as “tax saving season.”
This is because there are a number of tax breaks and deductions that can be taken advantage of in order to reduce one’s taxable income.
Let’s take a closer look.
What Are Some Things You Can Do To Help Prepare Savings On Your Taxes During Second Half Of The Year
To make sure you take advantage of all the opportunities available to you. Here are five of the best things to do in order to save on your taxes:
- Make charitable donations. Donating to a qualified charity is a great way to reduce your taxable income. And, if you itemize deductions on your tax return, you can deduct the full amount of your donations.
- Invest in a retirement account. If you’re not already doing so, investing in a retirement account is a great way to reduce your taxable income.
Not only will you get a tax deduction for the amount you contribute, but the money will grow tax-deferred and you won’t have to pay taxes on it until you retire.
- CAPEX purchases. By making a CAPEX purchase such as new equipment or a large order of inventory before the end of the year, you can take advantage of depreciation deductions and other tax benefits that can help to reduce your tax bill.
Of course, it’s important to carefully consider any CAPEX purchase before making it.
You want to do your research to see what would be the best purchase, based on your company’s finances, that will help to lower your tax liability and move you into a lower tax bracket.
Make sure to have: (a) a budget set aside for this type of purchase and (b) make sure it’s essential to the business.
- Sell investments for a loss. If you have investments that have lost value since you purchased them, selling them before the end of the year can help you offset gains from other investments.
Just be sure to hold onto the investment for at least one year to avoid paying taxes on the gain.
- Defer income into next year. If you’re expecting a bonus or other windfall in the next few months, it may be worth delaying receiving it until after January 1st.
This way, you’ll push the taxable income into next year and get a head start on saving for next year’s taxes!
By taking these steps before the end of the year, you can save yourself a lot of money come tax time.
Making filing your taxes a little less stressful and putting extra money in your pocket.
It’s a win, win!
If you haven’t already started planning for your tax savings, there’s still time!
Review the different types of deductions and credits available to you and start putting together a plan.
The sooner you start, the more money you can save.
Which one is already in your plans?
Questions? Contact us if you need help getting started!