If you want to have a pleasant time filing your taxes next year in 2022, you need to start thinking and planning for your taxes right now. There are steps you can take this year that will set you up for a better tax situation.
#1: Make Contributions to Your IRA Account
It is essential to save up for your retirement. One way to save up for your retirement and enjoy a tax discount for that contribution is by contributing to your IRA account. You can contribute up to the limit of your IRA account up until the tax filing deadline for that tax year. For example, you can contribute to your IRA account for 2021 until the tax filing deadline in 2022 for your 2021 taxes.
It is a good idea not to wait until the last minute; it is best to make these contributions over the course of the year.
#2: Use Flexible Spending Accounts
If you have a flexible spending account, you will want to make sure you contribute to your flexible spending account throughout the year. You will want to ensure you also spend all of that money taking care of your healthcare needs. You are going to want to contribute to that account and spend the money in that account.
#3: Learn About Tax Credits
Next, you are going to want to learn about tax credits that you can take advantage of. There is a wide range of tax credits that you can take advantage of. First, there is a lifetime learning credit that you can use to pay for education expenses. Second, you will want to save up for a saver's credit, which you can get based on savings in certain accounts. If you have a low income, you may qualify for an earned income tax credit.
#4: Keep Good Records
Fourth, you are going to want to keep good records. You are going to want to keep track of all of your medical costs and charitable donations, as well as business purchases. If you want to deduct these things from your taxes, you are going to need good records. Not all expenses mean you are eligible for a standard deduction; for example, business expenses and medical expenses fall into other deduction categories.
When it comes to planning for your taxes for 2021, you need to be proactive. You need to contribute to your IRA. You need to use your flexible spending account. You need to learn about tax credits. Finally, you need to keep good records of your receipts.
Contact a tax planning service near you to learn more.