Proactive Tax Strategies

We made it through another tax season, but that doesn’t mean our work is done! In fact, now is the perfect time to reflect not only on the past year but also to look ahead, as the actions you take now can significantly impact your future tax situations.

With that in mind, we’d like to share some key strategies and best practices to help you stay prepared and organized and potentially reduce your tax liability.

1. Keeping Track of Receipts: Keep your receipts. They provide proof of your expenses and can be invaluable in the event of an audit. Consider scanning or taking photos of your receipts and storing them digitally. There are several apps and software options that can help categorize and store them securely.
2. Understanding Deductible Expenses: Not all expenses are created equal in the eyes of tax law. Here’s a brief overview of common deductible expenses that you should track throughout the year:
   1. Mileage: If you use your vehicle for business, charity, medical, or moving purposes, you may be able to deduct mileage (67 cents a mile for business use, 14 cents per mile driven for charitable purposes, and 21 cents for medical or moving purposes for eligible Armed Forces members). Keep a detailed log of your trips, including the date, miles driven, and purpose of each trip.
   2. Meals: Business meals with clients or while traveling on business can be deductible. However, only 50% of these costs are typically deductible. Ensure you keep a record of the meal’s purpose and the attendees.
3. Quarterly Tax Payments: If you’re self-employed or have significant income not subject to withholding, making estimated tax payments throughout the year can help avoid surprises come tax time. This proactive approach can also help you manage your cash flow more effectively.
4. Retirement Contributions: Contributions to retirement accounts not only help secure your future but can also provide current tax benefits. Consider maximizing contributions to IRAs, 401(k)s, or other retirement plans. While many of these contributions can be made after the end of the year, you should be budgeting for these expenses throughout the year.
5. Charitable Donations: Charitable contributions can reduce your taxable income. Ensure that the value of any donations is documented, and for non-cash donations over $250, obtain and keep a receipt from the charity.
6. Health Savings Account (HSA) Contributions: If you have a high-deductible health plan, contributing to an HSA is a triple tax-advantaged way to save for medical expenses.

Our team is here to support you in implementing these strategies and more. Whether you need assistance in organizing your financial records, understanding which expenses are deductible, or planning for the future, we're just an email or phone call away.