Top 10 Ways to Lower Your Taxes

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If you want to lower your taxes, it’s important to have more than a vague understanding of how our tax code works, what tax bracket you expect to be in, and what sort of activities are incentivized and disincentivized by the Internal Revue Service.

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While certain moves can be made up until Tax Day (typically April 15th plus maybe a day or two), other effective tax mitigation strategies must be employed before Auld Lang Syne is sung as the calendar turns to January 1st. Throughout the year, opportunities exist if you know how to look for them.

A lot can be done to lower taxes. Below, I’ll share more than ten ways you can lower your taxes. Most can be used by everyone including W-2 employees, a couple of them are specific to business owners, and some I don’t necessarily recommend, but are worth mentioning for the sake of being thorough.

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Top 10 Ways to Lower Your Taxes

This may sound obvious, but if you’re not already contributing to the maximum allowed by the IRS in the various accounts that let you deduct tax-deferred contributions, this is where you need to start.

It's not always about making your taxes as low as possible, but about optimizing your tax situation. I’ve detailed my thought process behind making traditional versus Roth contributions. In general, the more money you make, the more it makes sense to defer the tax, but there is some nuance to that decision.

You might be able to invest in a 401(k) or 403(b). You may also have a 457(b) option; the governmental variety is a better 457, but it often makes sense to invest in a non-governmental 457(b) when it’s offered.

Something in the neighborhood of 90% of taxpayers do not itemize deductions, taking the standard deduction instead. In 2021, it will take $25,100 in itemized deductions to match the standard deduction for those married filing jointly.

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Top 10 Ways to Lower Your Taxes

If you want to lower your taxes, it’s important to have more than a vague understanding of how our tax code works, what tax bracket you expect to be in, and what sort of activities are incentivized and disincentivized by the Internal Revue Service.

While certain moves can be made up until Tax Day (typically April 15th plus maybe a day or two), other effective tax mitigation strategies must be employed before Auld Lang Syne is sung as the calendar turns to January 1st. Throughout the year, opportunities exist if you know how to look for them.

Top 10 Ways to Lower Your Taxes

This may sound obvious, but if you’re not already contributing to the maximum allowed by the IRS in the various accounts that let you deduct tax-deferred contributions, this is where you need to start.

#1: Max Out ALL Tax-Deferred Contributions Available

You might be able to invest in a 401(k) or 403(b). You may also have a 457(b) option; the governmental variety is a better 457, but it often makes sense to invest in a non-governmental 457(b) when it’s offered.

Something in the neighborhood of 90% of taxpayers do not itemize deductions, taking the standard deduction instead. In 2021, it will take $25,100 in itemized deductions to match the standard deduction for those married filing jointly.

#2: Maximize Itemized Deductions

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