Luckily, there will plenty of ways to save money on your taxes this year. Not only can you save money on your taxes as an individual, but you can save on taxes as a business owner as well. Here are five great tax tips for 2020:
1. Search for deductions
Deductions can allow individuals and business owners to save money on their taxes this year. If you’re a business owner, you will be able to deduct all expenses that are related to your business, which can allow you to save a lot of money in most cases.
As an individual, there are quite a few ways that individuals can get tax deductions as well. For instance, there are deductions for married couples and heads of a household, which can allow you to save a significant amount of money on federal and state taxes.
2. Add money to a tax-deductible retirement account
Adding money to a tax-free savings account can allow you to deduct the funds from your earned income this year. If your income is relatively close to the upper limit of a lower tax bracket, this can get you into it, which can allow you to pay a significantly lower tax rate this year.
3. Get tax credits for your dependents
If you have children under 16, you’ll be able to get a $2,000 tax credit for each person under this age who lives in your household. This tax credit reduces the amount of income that is counted as taxable income, which can reduce the amount that you pay on your taxes every year as well.
4. Deduct money that you spend on savings for a child’s education
One way to save money on your taxes is to put some of what you earn in a savings account for your child’s college education. This deduction can help you to reduce your total taxable income, which can put you into a lower tax bracket.
5. Put money in a health savings account
You’ll also be able to deduct money from your taxable income by putting some of it into a health savings account. In addition to being a valuable resource for people who do not have health coverage, health savings accounts can also help you cover healthcare costs that you may if you have health insurance, such as deductibles, co-pays, and procedures that aren’t covered by your health plan.
