Something many people dread during the year is filing and paying for taxes. Although they’re necessary, taxes are known for making people’s finances more difficult to grasp than it should be. Not only do they take a long time to file, but you might also be faced with a large amount.
However, there are plenty of ways you can save money for your taxes with some of them being methods you wouldn’t expect.
In this article, we’ll be covering the best ways to save money on taxes in 2023.
Deduct All of Your Business Expenses
If you’re someone who’s self-employed, then taxes can become a real concern. One of the main reasons why taxes are so high is because there’s no one to deduct a certain amount of money to pay the IRS. However, that doesn’t mean you’re stuck paying a high tax rate. You can cut your tax bill by a pretty significant amount by deducting any business expenses, and you’ll be pleased to know that the list of potential business expenses is quite long. Below is a quick list business expenses you can write off:
- Home office
- Phone bills
Before you start deducting, it’s important that you research everything you can write off. The more you save on taxes, the more likely you’re eligible for a refund.
Cosign on a Student Loan
You might be thinking that this is an unorthodox way to save on taxes, especially since cosigning is a huge responsibility. Even if it’s a loved one, like your child or sibling, you might be hesitant saying “yes” to them. If you go through with it, you’ll be helping them acquire an education of a lifetime and jumpstart their future career. However, cosigning isn’t without its drawbacks. For one thing, if something goes wrong, like the primary borrower can’t make a payment, you’ll have to do it.
Second, you’re putting your own credit at risk, so this requires a great deal of trust. But cosigning on a student loan isn’t a one-sided process. By becoming a cosigner, you’re eligible for one of the highest tax deductions available. Student loan cosigners can save up to $2,500, which greatly increases how much you receive on your tax refund. Before you can answer the question “should I cosign a student loan?”, make sure to weigh the pros and cons of being a cosigner.
Hire an Accountant
Sometimes, saving money on taxes isn’t always noticeable, at least to the naked eye. This is why you should consider hiring an accountant to go over your finances for you. Not only are these money masters able to do your taxes in less time, but they can also give you solid financial advice to help you save more money. One thing to note, however, is that working with a professional accountant doesn’t come cheap. They’re quite pricey as they charge by the hour for their services. But if it means saving time, money and stress on your taxes, no cost is too great.
Fund a 401k or IRA
Funding a 401k plan or an individual retirement account (IRA) is not only one of the safest ways to grow your money, but it is also by far, the most common and simplest way you can save money on taxes. A 401k plan is an employer-sponsored retirement account that’s tax-deferred. This means that any money that’s deposited into this account isn’t affected by tax rates until it’s time to withdraw. 401ks are heavily recommended as you don’t really have to do much with it. Your employer takes a cut out of your pay to fund it for your future. Alternatively, you can do the same with an IRA, but you must be more hands-on with it.