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They say that money is what makes the world go round, and in these modern times, money is a large necessity for every person to be able to survive. For a person to have money, they must find the means to earn it, such as getting a job or selling goods in exchange for payment. Aside from earning money to make a living, it is also important for a person to know how to save money.
Saving money is vital for people to protect themselves from unexpected expenses such as family or personal emergencies and more but with the level of difficulty that people go through to earn a livable wage, saving money has become some kind of luxury. In Thoughts of an American Taxpayer, Gary Williamson states “The American people are taxed to death, and the sad truth is that the people collecting the tax do not spend all these taxes wisely, responsibly, constructively, or prudently.”
Most, if not all, would agree with such a statement because when tax season comes, many people feel stressed and overwhelmed due to complex tax laws that can cause confusion for individuals. The key here is to become educated on such matters so that people can make informed decisions, especially when it comes to their hard-earned money.
A person can have a variety of reasons to save up on money or even more than one goal! Someone could be saving up for a car, a place that they have been wanting to travel to for a while now, or even just to ensure that they have lifetime savings for themselves. Whatever the reason may be, knowing how to save money is a vital skill, and taxes should not hinder this as it is important for a person to have savings, especially with the unpredictability of life. With that, here are different ways you can save money on taxes:
Remember to file on time
Filing your taxes late can come at a price, as it can lead to the need to pay a hefty fine. As much as possible, keep in mind that you will be on time, and if you cannot, as of the moment, request an extension.
Grow retirement account contributions
Contributions in the traditional IRA and 401(k) or 403(b) are typically made with pre-tax dollars, so adding to those accounts can lead to tax savings by lessening taxable income.
Build up a 529 college savings plan
A 529 college savings plan is a great way to save up money in the long run, as it offers great potential tax savings in two ways: when contributions are made with after-tax dollars, earnings are tax-deferred while invested. The money that people use for qualified educational expenses is not taxed. What’s more, that 529 contributions can also qualify for state income tax deductions or credits!
Make a health savings account
If you have a high deductible health plan through your employer, you may have access to a health savings account that will help you save for out-of-pocket medical expenses.
Create a flexible spending account
If you have expenses such as childcare, elder care, or medical expenses, pre-tax flexible spending account savings can truly help you plan your budget and lower your taxable income.
Check and polish your paycheck withholdings
Last year (2023), the average tax refund was $2,753, which is an increase of more than 7%. You can have your payroll tax withholdings changed at any time by checking with your human resources department for more information.
Learning how to save money on taxes is one thing, and being able to do so is another. While they may be two different things that connect with each other, taking action is the crucial part. Be an active member of the community by being part of the people who check if the government is doing its job in serving the people, such as holding them accountable and keeping it fair that everyone should be part of the tax process by paying their equal shares too.
Thoughts of an American Taxpayer is a book written by Gary Williamson that talks about how the United States of America is heading down a course of economic, financial, and social ruin, thanks in most part to an irresponsible and careless government. It is a government ruled not by the people but by progressive reformers seeking to restrict our freedoms. Get a copy of this book from Amazon, Barnes & Noble, and ReadersMagnet Bookstore.
