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Want to Reduce Your Tax Outgo? Try these ways!

Mar 18th 2019 at 12:09 AM

You ask anyone about paying taxes, and they will ask, “How can I pay less?” Well in this article we’ll discuss a few ways for NYC tax planning using which you can save on the taxes.

Check the Withholding

You should start by checking the withholding and should update the W-4 if there is a need for the same. Need some more withholding at year-end? You should use line 6 of the W-4 to state the amount. You should submit the updated W-4 if you wish to remove the extra withholding in the future. You should take into account the past balances if you want to avoid large balances.

Plan for Use It or Leave It

As a taxpayer, you should focus on the use-it-or-lose-it type of planning opportunities. It is a good idea to maximize the contributions to the available retirement plan. If you are more than 50yrs of age, you should keep in mind the additional contributions. You should review the flexible spending accounts or the FSA and plan how to use the fund before-hand. Bear this in mind that if you have funds by the deadline, you can take their benefits in tax-savings.

Bunch Charitable Contributions

According to the new laws, if you are a married couple the standard deduction limit stands doubled to USD 24,000, and for the single filers, the thresholds are USD 12,000. If you combine this with changes that repeal the standardized deductions means that almost everyone will be able to claim the standard deductions. You can also consider bunching the charitable contributions into the alternate years if it enables you to take the standard deduction in one year and then itemize the next. If you do not want to give money to charity, you can give it to the fund and then give it to the charity later on.

Gift the Money

You can also consider making annual gifts. If you want to reduce the tax exposure, then you can give USD 15,000 to an unlimited number of beneficiaries.

Are You In Right Tax Bracket?

Do you feel that your tax is high? You can boost you and your spouse’s 401(K) contributions or the spouse’s IRA contributions and lowe the tax outgo.

In the End

These are a few ways which can help you in NYC tax planning and reduce your tax burden.

 

 

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