6 Tax Strategies to Consider this Tax Season

Tax season is here, bringing both challenges and opportunities. The right strategies can help you potentially lower your taxable income, maximize deductions, and make the most of your retirement contributions—ultimately keeping more of your hard-earned money. With smart planning, you can reduce your tax burden and set yourself up for long-term financial success. The best part? You don’t have to tackle it alone. Here are seven essential tax strategies to consider this year.

1. Understand Your Tax Bracket: 

The first step in tackling your taxes is understanding your tax bracket and how it affects you. The U.S. has seven federal income tax brackets—10%, 12%, 22%, 24%, 32%, 35%, and 37%—but do you know where you fall? Has your bracket changed since last year? If so, are you prepared for the impact? 

Because the U.S. tax system is progressive, different portions of your income are taxed at different rates—meaning the more you earn, the more you may owe. This makes having a strategy essential. Knowing your bracket allows you to plan smarter, minimize surprises, and make informed financial decisions. Meeting with a financial advisor can help you navigate these complexities and create a tax plan that works in your favor. 

Learn More: What is My Tax Bracket

2. Keep an Eye Out for Tax Deductions and Credits: 

We’re always hunting for good deals when shopping—why not take the same approach with your taxes? Think of tax credits as discounts or “sales” on what you owe. By taking advantage of available credits, you can lower your tax bill and keep more money in your pocket. Here are some of the most popular tax credits to check out this season. 

• American Opportunity Credit: Helps offset college education costs, including tuition, fees, and course materials. 

• Charitable Contributions: This applies when you donate money, vehicles, art, investments, household items, or other assets to qualified charities. 

• Credit for the Elderly or Disabled: Available to individuals (or their spouses) who are retired due to permanent and total disability. 

• Home Office Expenses: If you work from home, you may deduct a portion of your mortgage or rent, property taxes, utilities, and maintenance costs. 

• Property taxes: Allows you to deduct state and local property taxes paid on real estate. 

• Residential Energy Tax Credits: Receive a tax break for installing energy-efficient upgrades like solar panels, insulation, or energy-efficient windows. 

• Saver’s Credit: Designed for low- to moderate-income earners who contribute to an IRA or workplace retirement plan. 

Taking advantage of these credits can make a significant difference in your tax liability. If you’re unsure which apply to you, a financial advisor can help you aim to maximize your savings.   

Learn More: Tis the Season of Giving: Charitable Contributions and Tax Benefits

3. Keep Good Records: 

Organizing your tax records isn’t just a once-a-year task—it’s a habit that can save you money and reduce stress. Without proper record-keeping, you could miss out on valuable deductions or even pay more than necessary. The key is knowing what to keep and having it easily accessible when tax time rolls around. Here’s a list of essential documents to hold onto for a smoother, stress-free filing process. 

• W-2 forms 

• Bank Statements  

• Receipts 

• Statement from charities 

• Invoices  

• Insurance records 

• IRA statements  

• 401(k) statements  

• Other important investment statements or records 

Most importantly, store your documents securely and in an organized manner—you’ll thank yourself later if you ever need them. 

Learn More: Your Resource Roundup for Tax Season: 5 Podcasts & Articles to Help You Get Ready

4. Leverage Tax-Advantaged Accounts:

When saving for retirement, the type of account you choose matters. Understanding the tax differences between Roth accounts and traditional IRAs or 401(k)s helps you plan wisely. While retirement savings aren’t tax-exempt, you can choose between pre-tax and post-tax accounts to manage when you pay taxes on your money. 

• Roth accounts: Roth accounts, like Roth 401(k)s and IRAs, are funded with post-tax dollars, so withdrawals in retirement—including gains—are tax-free. They also have no required minimum distributions (RMDs) unless inherited, allowing tax-free growth indefinitely. While contributions don’t provide an immediate tax break, they can be a smart long-term strategy if you expect a higher tax rate later.  

• IRA & 401(k) accounts: Traditional IRAs and 401(k)s are tax-deferred, meaning you won’t pay taxes until you withdraw funds in retirement. These accounts let you save money upfront by reducing your taxable income now, making them a smart choice if you want to lower your current tax burden. 

Learn More: Do You Have a Strategy for Tax Season?

5. Utilize a Health Savings Account

A Health Savings Account (HSA) isn’t just for medical expenses—it’s also a smart tax-saving tool. Contributions are tax-deductible, lowering your taxable income, and funds can be used for qualified medical expenses like co-pays, co-insurance, and prescriptions. An HSA helps you manage healthcare costs while providing tax benefits.

6. Review Social Security Benefits 

There are strategies available that can help reduce your taxable income for retirees and pre-retirees collecting Social Security. By understanding how Social Security benefits are taxed and exploring options like tax-efficient withdrawals or contributing to tax-advantaged accounts, you may be able to minimize the taxes owed on your benefits. Taking the time to look into these strategies can lead to substantial savings, giving you more flexibility and control over your retirement finances. 

Learn More: Planning for Taxes in Your Retirement Plan 

Conclusion:  

At 210 Financial, we focus on strategies that help you minimize taxes throughout your lifetime. However, the best approach depends on your unique financial situation. It’s important to consult with your financial advisor or a professional to explore personalized tax-saving strategies—not just during tax season, but year-round, to ensure long-term benefits. 

Meet with an advisor at 210 Financial today!  

 

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