Three Easy Tax Tips
Tax season is here, and the best way to prepare your return is utilizing the expertise of a professional tax advisor. A tax expert offers strategic solutions for finding unexpected deductions and savings.
Regardless of how you file, it’s good to know a few tax-saving tricks for your 2021 return and for planning in 2022. Here are three last-minute tips to navigate on your own.
Work From Home Deductions
Given the transition from going to the office to working from home, it is good to know your state’s specific guidelines for deducting the costs associated with an at-home office. This tax allowance is only relevant if your employer made you work from home or highly encouraged you to work from home.
If you fit your state’s criteria for a work from the home tax deduction, then share the days worked from home with your CPA. The financial advantage here is paying lower state income tax for these at-home workdays. There is a 2-3% savings on every $100,000 of income in some states.
Contribute To Your IRA And Roth IRA
Tax benefits for 2021 are available if you contribute to your IRA or Roth IRA by April 15, 2022. If eligible, you can still contribute the maximum allowable for you or your spouse for 2021. The limits for 2021 are $6,000 if under 50 and additional $1,000 catch-up if 50 or older.
The retirement fund deductions are complicated so consult with a tax professional to clarify what is allowed by the IRS. Making the maximum IRA contribution is an excellent non-deductible strategy for higher-income earners. You may convert these IRA funds into a Roth IRA contribution for you or your spouse.
Contribute To Your Health Savings Account
If you have a qualifying high-deductible health plan, you may contribute to an HSA (Health Savings Account). These health-related savings funds are tax-deferred and grow tax-free.
Similar to the IRA strategy, you may make a retroactive contribution to your Health Savings Account for 2021 until the tax filing deadline on April 15, 2022. The limits here are $3,600 for an individual and $7,200 for a family. If you are 55 or above, you can contribute an additional $1,000. So, it is wise to contribute the maximum amount to your 2021 HSA to take advantage of these non-taxable dollars.
Clever Ways To Beat The Taxman
As per the famous lyrics of The Beatles, the taxman is waiting and looking to make money wherever possible. So, consult the expertise of a tax professional soon to circumnavigate the many ways the taxman hopes to reap your financial gains.
There is still time left to leverage these three simple tax tips on your 2021 taxes. Saving for the future, contributing to your wellness, and leveraging your work-from-home benefits are great ways to ensure you live a life of wealth, health, and happiness.
This post first appeared on Forbes.