My Taxes Has Resumed

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One task I’m not particularly fond of is dealing with my taxes, but it’s one of those inevitable responsibilities. The outcome can be uncertain, even when you’re aware of your position in the tax bracket, until you’ve gathered all your documents.

For 2024, the tax deadline is April 15th.

Moreover, this year, things have taken a positive turn for us. We managed to maximize our tax benefits; owning property has made a significant difference. In contrast, in previous years, we weren’t as fortunate, and we ended up owing the Internal Revenue Service.

I realized where I needed to improve when filing my taxes with TurboTax. For instance, I hadn’t been taking full advantage of my retirement contributions and deductions.

I would rather owe the IRS

2023 tax rates for married filing jointly

Nevertheless, this didn’t bother me much because I prefer owing the government and ensuring accurate payments before interest rather than receiving a large refund at the end of the year. I’m content with paying less tax and making the best use of my money, like watching my investments grow steadily throughout the year, even if it means they’re growing at an average rate of 6%.

As a dual-income household, our tax situation is not as complicated. Allow me to outline the steps I took to maximize our taxes for the fiscal year of 2023.

Our Incomes

• Our W2s. She’s not a fan of doing taxes either, so to make it easier, she hands them to me every year.
• Dividend income. It comes in the form of a 1099-DIV.
• Interest income. If you earn $10 or more in interest from a bank or brokerage institution, you’ll receive a 1099-INT.

Our Write-offs and Credits

Student loan interest deduction. If you paid interest on your student loans, you may be eligible for this deduction. For 2023, you can claim a deduction of $2,500 from your taxable income, depending on your eligibility.

Retirement contributions. The maximum contribution to a 401k plan in 2023 is $22,500. If your job offers a match, I suggest contributing at least up to the match contribution. Do not leave money on the sidelines; every little bit counts. By contributing to these accounts (401k, 403b, or 457b), you can reduce your W2 gross income. For example, if your gross income is $100,000 and you invest $20,000 for that year, your W2 will show you’ve earned $80,000. This is one of the best ways to reduce your tax bracket.

Mortgage interest. Even though we only owned the property for six months last year, it made a difference. Your servicer will send you a 1098. If not, you. should be able to get it online.

Office space. I have a small business that allows me to write off some expenses in our home, such as my home office space, renovation, a portion of the mortgage, and utilities such as electricity, heat, Wi-Fi, water, etc.

Child tax credit. For each qualified dependent, the child tax credit is worth $2000 for up to two dependents. If you have three or more, please refer to the IRS guidelines.

Consider these options, which I’m exploring and think you might find interesting too

HSA account. The Health Savings Account is another tax-advantaged method to put money away for future medical costs. In 2023, the contribution limit was $3,850 for individuals and $7,750 for families with coverage.

Charitable donations. We’ve consistently donated in various ways, but we’ve never explored selecting from a qualified list for donations. I hope the process isn’t as complex as some blogs make it seem.

Do you make charitable donations?

My Taxes Are Back on Track

In conclusion, while dealing with taxes may not be a favorite task, it’s an unavoidable responsibility. I don’t mind having to pay the IRS back because, as a responsible person, I know that I will be paying them their share. However, having to owe four figures was not something I was comfortable paying back each year. I’m okay with getting reimbursed a few hundred bucks like this year.

However, taking proactive steps to understand and optimize one’s tax situation can lead to positive outcomes, as seen above. By maximizing available tax benefits, such as leveraging property ownership, maximizing retirement contributions, and utilizing deductions and credits like the student loan interest deduction, home mortgage deduction, and child tax credit, individuals can potentially reduce their tax liability and improve their financial standing.

So, remember that you only have less than a month. The deadline for filing your taxes is April 15th.

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