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Peter Walters

Peter Walters is a freelance writer who covers reputation, social enterprise and intelius removal. He is the Director of Business Development & Partnerships at Two Degrees Food in San Francisco, CA.

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5 Ways to Save Next Tax Season

Peter Walters

March 21, 2013


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Talking taxes is rarely fun to talk about...except when you’re talking about savings.

While tax season only happens once per year, how you manage your money and assets (both personal and if you run a small business) over time can help you, or hurt you.

To help prepare for next year, here are five tips for ways to save for 2014 in the next year.

1. Go Green

While “going green” can sometimes seem more expensive at the time, the tax credits and deductions available often make it worth the extra cost.

If you’re a homeowner, there’s a tax credit that’s available for when you install alternative energy sources such as solar electric systems, geothermal heat pumps and more. This tax credit equals 30% of what a homeowner spends on these types of home improvements, and there’s no cap on the credit.

2. Get Help Preparing Your Tax Return

Strangely enough, paying someone to prepare your taxes can often save you a lot of money. Tax lawyers and accountants are experts in finding all the deductions that you qualify for. Get all your statements, W-2 forms and financial documents in order before you send them off. While a CPA can be very helpful, many do bill hourly so make sure you’ve filled out at least some information and have organized all your records to make their job easier. Find a tax pro to help you get organized.

3. Prepay Interest & Other Expenses

If there are expenses that you know are tax deductible, and you have the cash on hand, prepay them to save on taxes the following year. Consider prepaying interest on your mortgage, investments or any other expenses that you know about. Get them paid by the end of December and you can likely include those as deductions for the following year. The more you can be aware of your annual expenses, the more easily it will be to pay them off early and save money in the long term.

4. Pay your Family Members

If you’re a small business owner, hire your children to work for you. It won’t work for every family, but if you can make it work, give it a shot! Put them on payroll or issue them a 1099 as a general contractor. The money that you pay them can then be counted as a business expense. Your children would still need to pay a small federal income tax, but not nearly what you would had you kept the money for yourself or paid a non-family member employee.

5. Fund an IRA, 401(k) or Other Retirement Plans

One of the best things you can do for yourself both in planning for your future retirement, and for cutting down on taxes if to fund either a 401 (k), a traditional IRA, or both. Employer sponsored retirement plans enable you to contribute funds on a pre-tax basis, ultimately reducing your annual taxable income. The opportunity to make contributions to your retirement accounts closes at years end, so the more that you can add throughout the year, the better.

Tax season doesn’t need to be painful, or cause for stress.

If you follow these steps throughout the year, be constantly aware of opportunities for deductions, you might just get some money back from the IRA.