YOUR MONEY Tackle
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Tax Time Like a Pro
5 ways to slash your IRS bill now. :: BY DANIELLE BRAFF
ure, taxes are inevitable — but that doesn’t mean we have to resign ourselves to shelling out so much of our
hard-earned dough come tax time every April. The secret to minimizing your
tax bill is planning ahead. To help, we’ve asked our experts for five proven strategies.
MAKE THE MOST OF YOUR TAX BRACKET
This is the most important step,
because a few minimal adjustments can have a major impact. The federal income tax brackets
are currently 10%, 12%, 22%, 32%, 35%, and 37% — but as you may already know, tax brackets work incrementally, so the amount of tax you pay on the first portion of your income is lower than the amount of tax you’ll pay on the last portion. For example, if you have
$100,000 in taxable income, the first $10,000 will be taxed at 10% ($1,000), while the next $30,000 will be taxed at 12% ($3,600), and the next $45,000 will be taxed at 22% ($9,900), while the remainder will be taxed at 24% ($3,600). That means your total tax owed is
$18,100, or 18.1% of your $100,000 of taxable income. So, in this example, even though you would be in the 24% bracket, you’re only paying 24% on the last $15,000 of your income. With some careful planning,
you can avoid the 24% tax bracket altogether. For example, if you
78 NEWSMAX MAXLIFE | APRIL 2025
contribute $19,500 to a 401(k) or similar qualified, tax-advantaged retirement savings plan, you can reduce your taxable income to $80,500, putting you in the 22% marginal tax bracket. You can also delay some income
into next year if you want to stay in a lower tax bracket now. For example, let’s say you’re a small business owner; you can delay billing clients toward the end of the year, so you don’t realize that income until next year. Alternatively, you can accelerate
income into the current year if you anticipate being in a higher tax bracket next year, or delay taking income in the current year if you think you’ll be in a lower tax bracket next year.
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MAXIMIZE DEDUCTIONS When the Tax Cuts and Jobs Act was passed in 2017,
the standard deduction increased substantially. That makes it simpler
for most people to file their taxes, but it also means far fewer people are able to itemize deductions. Unfortunately, if you take the
standard deduction, you can’t also deduct things like medical and dental expenses, charitable contributions, state and local taxes, mortgage interest, property taxes, and unreimbursed job expenses. So, it’s always best to do the
math to calculate your total itemizable expenses and see if they exceed the standard deduction for your filing status. And before the year ends, see if
it’s possible to pay expenses — such as January’s mortgage payment or certain medical expenses — to boost your itemized deductions.
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CREATE A CHARITABLE REMAINDER TRUST
If you have assets that have
appreciated substantially and plan to give money to charity, it may make sense to create a charitable
BILLS/DOUGLAS RISSING©ISTOCK / COUPLE/VITAPIX©ISTOCK
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