Good afternoon, BLGNERO. Thank you for joining us!
You asked, how can I avoid owing taxes this year.
The best way to avoid owing at tax time, is to make sure you understand that taxes are a pay-as-you-go system. This means that you need to pay most of your tax during the year, as you receive income, rather than paying at the end of the year.
There are two ways to pay tax:
- Withholding from your pay, your pension or certain government payments, such as Social Security.
- Making quarterly estimated tax payments during the year.
This will help you avoid a surprise tax bill when you file your return.
In addition, to making sure you are paying enough in you may want to consider
- Contributing to an IRA all the way until tax filing day and still deduct the eligible amount from your taxable income.
- Taking capital losses before the end of the tax year to offset your capital gains, and you can use up to $3,000 of excess capital losses to offset your ordinary taxable income.
- Taking advantage of the numerous tax credits, that are available for things such as home energy improvements or electric vehicles.
- If self-employed,, purchasing needed items for your business in the current year, to increase expense deductions, and decrease your overall business income.
For more tips and ideas on how to lower your tax bill, please checkout the following:
Tips to lower your tax bill
Ways to Reduce Taxes
W4 and your take home pay
Hopefully. that helps!
Terri Lynn, EA
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Terri Lynn H.
