The new tax law has added some wrinkles to how many Americans deal with their tax returns. In the past, it was common to try to maximize deductions during the year and then itemize on your return. However, with the increase in the standard deduction for individuals and families this year, reducing taxable income is actually a better move for a lot more families.
According to Turbo Tax, almost 90% of tax filers will claim the standard deduction this year. This is a major shift from the norm. In past years, only about 70% of filers claimed this deduction.
So here are three ways to help you reduce your taxable income during the remainder of the year:
- Get the most from investment losses. If any of your investments are in taxable accounts, consider selling them to realize any losses. Selling losses can actually offset any gains you made during the year.
- Increase retirement savings. You can increase the amount held from your remaining paychecks this year for any workplace retirement savings plans that you have. Just be sure to reset your contributions when January comes along if you don’t want to keep the higher rate of withholding going forward.
- Max out your HSA. If you have a high-deductible health plan and haven’t yet maxed out your HSA, consider doing so now. This money can roll over indefinitely and can offset any future medical expenses. Don’t forget, if you have an FSA you must spend all the money this calendar year, as they don’t typically roll over.