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September 08, 2021 | Posted in:

4 Simple Ideas To Ease Your 2021 Tax Burden

With four months left in the year, it’s not too late to maximize tax savings on your 2021 return. These four strategies can help cut your taxes.

1. Contribute To Retirement Accounts.

Tally your contributions to date and determine how much more you can stash away by December 31. You can reduce your 2021 taxable income by as much as $19,500 by contributing to a retirement account, and up to $26,000 if you’re age 50 or older.

2. Increase Daycare Expenses.

There is a larger tax break in 2021 for childcare and elder care costs. If you have one qualifying dependent, you can spend up to $8,000 while cutting your tax bill by $4,000. For more than one dependent, the spending limit is $16,000 with an $8,000 tax credit as long as your adjusted gross income does not exceed $125,000.

3. Contribute to an HSA or FSA.

If your employer offers a health savings account (HSA) or a flexible spending account (FSA), use it! In 2021 you can make pre-tax contributions up to $2,750 into an FSA and funds can be used for health expenses and child care. Usually, you lose any money not spent during the year, but for 2021, you can roll over FSA funds to 2022. With an HSA, contributions are tax deductible, withdrawals for qualified healthcare expenses are tax-free and you can leave in money you don’t need. Single filers can set aside $3,600 and married couples $7,200 in 2021.

4. Make a Charitable Contribution.

Even if you take the standard deduction, you can still donate to your favorite charity and deduct up to $300 if you’re single and $600 if you’re married.

There’s still plenty of time to make changes that will help reduce your tax liability for 2021. Your Alloy Silverstein team is available to talk you through these and other tax planning opportunities.

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