Think Strategically – Pay Fewer Taxes

When it comes to paying taxes, paying less is better, right?

Did you make any contribution to the charity last year?

Taking deductions requires good record-keeping.  If you keep your receipts whenever you make charitable deductions on donated money, household items or clothing, valuable art or properties, kudos to you, because any donation more than $250, a receipt from the charity is needed.  Regardless of the amount, you should keep good records of your charity contributions, because you can save your taxes. IRA and Health Savings Accounts can be used to shelter tax refunds.

You can use your tax refund to lower your 2016 tax, but you have to file as early as you can, because the deadline for depositing the money into an I.R.A. or H.S.A. is the same as the due date for filing tax returns.

Make sure you make your deposit in your IRA or HSA by April.

If you are eligible for an I.R.A. or H.S.A., claim deductions for them on the return, based on the amounts calculated by the accounts’ custodians, and include Form 8888, directing the I.R.S. to deposit those amounts directly into the accounts.

Tell your account custodian (it may be a bank or a mutual fund company or a brokerage) that the deposit should be applied to 2016, she said. Any excess from the refund can go to your regular bank account.

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