Five Ways to Successfully Reduce This Year's Tax Bill

Five Ways to Successfully Reduce This Year’s Tax Bill

November 20, 2020

If you’re one of the millions of Americans who feels like their annual federal and state taxes continue to rise each year, you’re not alone. Trying to save some money on your taxes is a routine practice even in a typical year, but in a 12-month period that has seen so much economic turmoil, making sure your tax bill is as low as possible is an absolute necessity. Fortunately, our reliable tax service in Castro Valley, CA has you covered with the following tips to save you money.

Double check your W-4

If you got a massive refund last year, you could be having your employer withhold too much of your income on each paycheck. On the other hand, if you were slammed with an enormous tax bill, you could save yourself some trouble by upping the amount withheld every pay period. You can adjust your W-4 to better serve your tax time needs at any time of the year.

Prep for retirement

When it comes right down to it, the federal government doesn’t want to get stuck with the bill for your retirement. As a result, they make allowances for those who want to save as much capital as possible. For example, you can put nearly $20,000 a year into a 401(k). You can stash another $6,000 in an IRA. There’s no reason to get taxed on money that could be going toward building a happy, healthy retirement.

If you don’t have a 401(k) or an IRA, a reliable tax service in Hayward, CA can help set one up for you with minimal fuss.

Investigate the EITC

Those people who earned less than $57,000 throughout the year should look into the Earned Income Tax Credit (EITC). In 2020, the EITC could help defer as much as $7,000 of your taxable income, depending on certain factors like marital status and number of dependents.

Save for college

Speaking of dependents, you could also see a reduction in your tax bill if you put some money into the state’s 529 plan. This educational savings account is operated by either the government or an educational institution. Participants can set aside as much as $15,000 a year toward a specific beneficiary. Given the soaring prices of higher education, starting to save now may not be the worst idea.

Get the whole scoop

Those are just the tip of the iceberg when it comes to saving money on your tax return. The best thing you can do is trust your taxes to a pro. With help from Menjivar & Company CPAs, Inc., the most reliable tax service in San Leandro, CA, you can discover some new ways to help protect your income when tax time rolls around. We have four decades of experience assisting private citizens, companies, financial entities and more with a wide array of services, including bookkeeping, payroll services, audit support and more.

When you need a Californian accountant with significant knowledge and experience, make it Menjivar & Company CPAs, Inc. We’re ready and waiting to help take the sting out of next tax season. Call today to schedule your appointment.

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