5 ways to save on taxes under the new laws
Congress passed new tax laws in 2017 that made sweeping changes to our taxes. Starting in 2018 there will be new laws to be aware of, new fines and penalties, but also new ways to save money on your taxes. Here are some ways to take advantage of new opportunities to save yourself money!
Take advantage of tax-deferred savings
One way to save the most money on your taxes is to stash money away in savings accounts that are tax-deferred. This type of account is one that you do not need to pay taxes on any of the money you put into it! 401(k) accounts are one prime example of a savings account that taxes are deferred on.
Give away your money
I know it seems counter-intuitive to save money by giving it away, but it works! If you donate money to charitable organizations, it can lower your taxable income. This means you will need to pay less come tax season. And if you have appreciated stocks or mutual funds, those are worth even more when donated, potentially saving you large amounts on taxes!
Start the business you’ve always wanted
Under the new tax laws, people who start new businesses can have massive tax deductions. Individuals who use Schedule C (also S corporations, partnerships, and LLCs) can deduct 20% of their income from their taxable income! Sadly, this is limited to individuals who file an income more than $157,500 or those who file over $315,000 jointly.
Use alternative energy
The new tax reforms give tax deductions to homeowners who go green. If you install wind turbines, solar water heaters, solar electricity systems, geothermal heat pumps or other qualifying alternative energy projects on your home, you can get up to 30% of the cost deducted from your taxes. The amount of the deduction drops after 2019, so now is the time to go green!
Care for loved ones in tax-friendly ways
Caring for loved ones with special needs can be extremely expensive. However, the new tax laws have created some ways to use those expenses to save money on taxes. Child-care reimbursement accounts and ABLE accounts are the best examples of programs to use pre-tax dollars to pay for medical expenses.