5 Tax-Saving Strategies to Keep More of Your Money

Shallon Weis |
Categories
Tax Planning
Retirement

Tax season doesn’t have to be stressful. With a few smart moves, you can keep more of your hard-earned money and set yourself up for long-term financial success. Whether you file on your own or work with a pro, these tips will help you make the most of tax time.

1. Adjust Your Withholding to Stay Balanced

That big refund check? It’s not a bonus—it means you’ve been giving the government an interest-free loan all year. On the flip side, underpaying could leave you with a surprise bill at tax time.

How to Stay on Track:

  • Review your W-4 with your employer, especially after a new job, marriage, or other big life changes.
  • Use the IRS Tax Withholding Estimator to make sure you’re not over- or underpaying.
  • Talk to a tax pro to fine-tune your withholding and avoid surprises.
2. Make Estimated Tax Payments If You’re Self-Employed

If you’re a freelancer, gig worker, or side hustler, you don’t have taxes automatically withheld from your paycheck. That means you may need to make estimated tax payments to avoid penalties.

Key Deadlines:

  • April 15: For income earned Jan 1 – Mar 31
  • June 15: For income earned Apr 1 – May 31
  • September 15: For income earned Jun 1 – Aug 31
  • January 15: For income earned Sep 1 – Dec 31

How to Stay on Track:

  • Use IRS Form 1040-ES to calculate and submit payments.
  • Set aside a portion of each payment for taxes so you’re not scrambling at the deadline.
  • Automate payments through IRS Direct Pay or the EFTPS system.

3. Use Tax-Advantaged Accounts to Build Wealth

Saving for the future? Certain accounts can lower your taxable income now and boost your long-term financial growth.

Best Accounts for Tax Savings:

  • 401(k): Reduces taxable income and often includes employer matching contributions.
  • Traditional or Roth IRA: Traditional IRAs may lower your tax bill now, while Roth IRAs let your money grow tax-free for the future.
  • Health Savings Account (HSA): Contributions are tax-deductible, grow tax-free, and can be used for medical expenses without taxes.
  • Flexible Spending Account (FSA): Helps cover medical costs but has a “use it or lose it” rule by year-end.

Pro Tip: Automate your contributions so you stay consistent without thinking about it.

4. Claim Every Deduction and Credit You Qualify For

Deductions lower your taxable income, and credits reduce your tax bill dollar-for-dollar. Don’t leave free money on the table!

Common Tax Benefits for Young Investors:

  • Saver’s Credit: If you contribute to a retirement account, you may qualify for extra tax savings.
  • Student Loan Interest Deduction: Deduct up to $2,500 in student loan interest if eligible.
  • Energy-Efficient Home Credit: Save money for making eco-friendly home improvements.
  • Self-Employment Deductions: Deduct business expenses like your home office, internet, and phone.
  • Charitable Donations: Some contributions may be deductible, even if you don’t itemize.

How to Stay on Track:

  • Keep records of expenses and receipts throughout the year.
  • Review IRS guidelines or work with a tax pro to ensure you claim everything you qualify for.

5. File on Time to Avoid Penalties

Waiting until the last minute? The IRS won’t cut you any slack. Late filing or missed deadlines can lead to penalties and interest charges.

How to Stay on Track:

  • Mark tax deadlines on your calendar and set reminders.
  • If you need extra time, file an extension using IRS Form 4868.
  • If you owe and can’t pay in full, set up a payment plan with the IRS rather than ignoring the bill.

Bonus Tip: Adjust for Life Changes

Big life events can impact your tax situation, so it’s important to adjust along the way.

Key Adjustments to Make:

  • Update your W-4 with your employer after getting married, changing jobs, or having a child.
  • Check if you qualify for new deductions or credits, like the Child Tax Credit or Mortgage Interest Deduction.
  • Consult a tax professional for personalized planning based on your unique situation.

The Bottom Line

Smart tax planning isn’t just about April 15—it’s about making year-round moves to keep more of your money. By understanding your withholding, estimated payments, tax-advantaged accounts, and deductions, you can take control of your financial future.

Need help navigating your taxes? Bradford Financial Center is here to guide you. Reach out to our team for personalized advice and tax-saving strategies tailored to your financial goals.