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Matthew Ledvina Suggests Ways to Cut Down the Tax Bills for This Year

 


A huge tax bill not just ruins your day, but even the rest of the month. However, the good news is that there are ways for you to move past the unpleasant surprise of an unexpectedly high tax bill. Here are some of the ways in which you can cut down the tax bills for the year. In many of the cases, you need to itemize and not follow standard deduction to use the strategies. But, that extra effort would be worth it.

Find a way out to tweak the W-4

The W-4 is the form that your employer gets from you, whereby, you mention how much tax to be withheld from every paycheck. You have the option to make changes to the W-4 at any time. One of the top US tax advisers, Matthew Ledvina suggests two ways to tweak the W-4:

·         If you have receive a huge bill for this year, and do not want to get the same surprise next year, raise the withholding to make sure you don’t owe an exorbitant amount at the time of filing the tax returns.

·         If you have received a major refund, reduce your withholding because, failing to do so would mean pointlessly living on a compromised paycheck whole year.

Store your money under 401(k)

It is a simple equation that less tax is a direct result of less taxable income. Thus, 401(K) is a viable way to save up on your tax bills. The IRS will not charge you based on the amount diverted directly from the paycheck into the 401(k). Here are a few things that you can do:

·         Funnel an amount of up to $19,000 each year into the account

·         Add about $6,000 more this year, in case you are fifty or older

·         The employers usually sponsor these retirement amounts, even though a 401(k) can be opened on their own by the self-employed group of people. You will get free money to add to your bank account, in case your employer is ready to match all or some of the contributions.

Consider investing in an IRA

Two main types of retirement accounts exist for individuals, namely, the traditional and the Roth IRAs. MatthewLedvina says you can deduct contributions in a traditional IRA, but the amount of deduction depends on whether your spouse has a retirement plan and your annual income.

·         The limits of IRA stand at $6,000 each year, or $7,000 for people over the age of fifty.

·         You get until the deadline of tax filing to fund the IRA for the last tax season. This gives you enough time to make the right decision about your finances.

So, those were the three invaluable tips that will truly come in handy to save your taxes for this year. However, these were only a basic guideline, and you should contact a reputed tax adviser to know what you can do to save up on taxes.

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