Put your retirement savings in Turbo boost mode all while lowering your tax bill. One of the best and easiest ways to lower your tax bill is to decrease your taxable income. Contributing to your 401(k) or similar retirement savings plan is one of the best ways to reduce your taxable income. If you have yet to start one, you need to immediately!
Adjust your W4 dependents to reduce payroll tax deductions. Why pay Uncle Sam to hold your hard earned money? The more withholdings you claim, the less tax deduction. Give yourself a raise. Bottom line, if you get a big tax refund every year, it means that you are having too much tax taken out of your paycheck. Update your employer W-4 form (talk to your payroll or HR office) to insure you get more of your earned money.
Reduce your taxes by donating old clothes or other charitable items.
You can also take advantage of a health tax break. Sign up for your employers medical reimbursement account (if they offer one). It is sometimes referred to as a flex plan. These plans let you move part of your paycheck to an account which you can then use to pay medical bills. The big advantage is that you are able to avoid both income and Social Security taxes. Keep in mind that there is a maximum you can contribute to a health care flex plan.
Reduce your taxable income by itemizing your deductions. You can include more than standard deduction but it requires a “schedule A” and meticulous record keeping.