October 20, 2020

Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.

During tax season, most taxpayer’s goal is to save as much money as possible and to receive the biggest refund check. Regardless of your age, salary, and financial situation, no one wants to deal with a tax bill after filing their tax return. 

There are a few tax breaks that are difficult to come by. For example, if you don’t own a home, you won’t be able to itemize any expenses such as, mortgage interest on your tax returns. It’s important to keep in mind when filing that if you’re a moderate to high income earner, you may miss out on certain tax credits that low-income filers may qualify for.

Taxpayers should research what tax breaks they will qualify for based on their filing status and financial situation. Here is a way for taxpayers to get a tax break when filing their next return:

Max out your retirement plan contributions

It’s necessary for most people to start saving for their retirement as early as possible and now, there are tax benefits to save money while putting it away in your retirement. 

Both traditional IRA and 401(k) contributions are made with pre-tax earnings. Every dollar put into your retirement, is a dollar of income the IRS can’t tax you on. The savings associated with your retirement will determine the tax bracket you fall into.

If you’re looking to get a tax break on your 2021 taxes, be sure to contribute to a traditional retirement plan, not including a Roth account. If you’re investing in Roth contributions, you need to know that it’s made up of after-tax dollars so you won’t see the benefits of immediate tax savings. 

For those wanting to lower their tax bill in 2021, try maxing out your retirement plan in order to see the most savings when filing your taxes. This could potentially lead to you receiving a higher refund or reducing your tax bill.

If you need tax help, contact us for a free consultation.