Taxes can be a nuisance—and many people would prefer to pay as little tax as possible. While it’s not likely you can entirely avoid paying taxes, there are ways to use the tax code to your advantage, and a number of simple steps you can take that may lower your tax liability.
Saving for Private School and College
If you have children who may attend college in the future, or who attend or will attend private school, it can pay off to open a 529 savings plan.
Putting Estimated Tax Payments on Your Calendar
While this move won’t technically lower your taxes, it could help you avoid a higher than necessary tax bill at the end of the year. That’s because income tax in the United States works on a pay-as-you-go system.
Saving Your Donation Receipts
If you have a high deductible health plan, you may be eligible for or already have a health savings account (HSA), where you can set aside funds for medical expenses. HSA contributions are made with pre-tax dollars, so any money you put into an HSA is income the IRS will not be able to tax.
Making Student Loan Payments
You may be able to lower your tax bill by deducting up to $2,500 of student loan interest paid per year, even if you don’t itemize your deductions. There are certain income requirements that must be met, however.