Old Year’s Resolutions Can Help You Save Money On Taxes
The time to panic about being able to afford holiday celebrations comes and goes quickly; soon it will be Divorce Monday, the first business Monday of the year. Even if you are single or if you and your spouse are committed to honoring your vow to stay together for better or worse, the transition from New Year’s to just another new year means that taxes will be due soon. An optimist would say that, if you owe taxes to the IRS, you should count your blessings, because it means you earned a substantial amount of money. It is hard to be that kind of optimist as 2022 draws to a close, however; many families with household incomes above $100,000, including some who did not even qualify for the initial round of stimulus checks in 2020, are living paycheck to paycheck. Financial decisions you make now, before the end of 2022, can affect the amount you owe to the IRS this coming April. If you are dreading seeing tax debts pile up on top of all your other debts, contact a Miami debt lawyer.
Contribute to Your 401(k) or Open a New 401(k) Account
It is hard to feel grateful about your salaried job when your entire salary goes to the minimum payments on your mortgage, medical bills, credit card debt, and buy now pay later (BNPL), but if your employment benefits package includes a 401(k)-retirement account, you should be grateful for that. Money that you contribute to your 401(k) account is not taxable, and many employers will match your contributions. If you are self-employed, you can open a 401(k) on your own, and the money you contribute to it will also be non-taxable, just like it is for salaried employees.
Be Honest With Uncle Sam About How Much Money You Lost on Investments
No one likes getting a negative return on an investment, except when this reduces the amount you will have to pay in taxes. You should report the amount of your investment losses honestly on your tax returns, because this can ease your tax burden similarly to how business losses and the depreciation of business assets can.
Time Your Gig Payments Strategically
If 401(k) accounts and investment losses sound like high class worries to you, welcome to the gig economy. Freelance workers have to pay a mind-blowing 30 percent of the money they earn from 1099 gigs back to the IRS in taxes, so if you have enough money in your bank account to get through a modest holiday celebration, consider deferring the invoices for this month’s work to early 2023. It means that they will count toward your 2023 taxes, but perhaps the economy will have improved by then and you will be able to afford your taxes.
You Can’t Discharge Tax Debt in Bankruptcy, but You Can Work Around It
A South Florida debt lawyer can help you consolidate or settle as many of your debts as possible so that you can afford to pay your taxes by the time they are due. Contact Nowack & Olson, PLLC in Plantation, Florida to discuss your case.