Tax Planning Strategies For 2021 Tax Year With Mistakes To Avoid

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If you track your spending; you will notice that often taxes are the biggest expenses. Because most taxes are usually deducted at source; we do not notice the huge bite taken by the government.

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The US tax code is complicated and runs over 75,000 pages. No wonder, I found out that even CPAs make mistakes on your tax returns. With the new bill for additional tax changes being debated in Congress.

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Reduce Taxable Income

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Health Savings Account (HSA)

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Flexible Spending Account (FSA) The advantage of FSA is that the payroll deductions avoid both income and Social Security taxes If you participate in the healthcare Flexible Spending Account (FSA), make sure you spend all the funds in your account by December 31.

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Commuter account

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Deferred Compensation Plan

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Swipe Up for more about Tax Planning Strategies For 2021 Tax Year With Mistakes To Avoid

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Tax Planning Strategies For 2021 Tax Year With Mistakes To Avoid

If you track your spending; you will notice that often taxes are the biggest expenses. Because most taxes are usually deducted at source; we do not notice the huge bite taken by the government.

The US tax code is complicated and runs over 75,000 pages. No wonder, I found out that even CPAs make mistakes on your tax returns. With the new bill for additional tax changes being debated in Congress.

Reduce Taxable Income

Tax Planning for Individuals

Pre-tax Retirement Contributions Max out your Pre-tax retirement contributions since this is the easiest way to reduce your taxable income. Contributions made to pre-tax accounts such as employer-sponsored 401(k) plans

Health Savings Account (HSA)

HSAs (health savings accounts) are triple tax advantaged. The contributions are exempt from tax, the account grows tax deferred and you receive tax-free distributions when used for medical purposes.

Flexible Spending Account (FSA) The advantage of FSA is that the payroll deductions avoid both income and Social Security taxes If you participate in the healthcare Flexible Spending Account (FSA), make sure you spend all the funds in your account by December 31.

Commuter account

You can set aside the monthly cost of your commute before taxes in a Commuter benefit account. Besides transit, Commuter benefits can be used for parking and UberPool. In 2021, the IRS mandated limit for pre-tax contributions to commuter benefits accounts is $270 per month in transit expenses.

Deferred Compensation Plan

Depending on your level in the organization you might have the option to enroll in Deferred Compensation Plan. This is great for Financial Freedom Countdown readers because you can set aside a portion of your compensation to be deferred for the future.

Swipe Up for more about Tax Planning Strategies For 2021 Tax Year With Mistakes To Avoid

Swipe Up for more about Tax Planning Strategies For 2021 Tax Year With Mistakes To Avoid

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