The tax return you file next year will be the first since the biggest overhaul of the U.S. tax system in three decades, but as the editors at Kiplinger’s Personal Finance point out, the time to start planning to maximize tax savings is now.
“A number of breaks bit the dust, but some new ones were introduced as well,” Kiplinger’s says. In fact, their article has 14 ways that everyone can benefit under the new rules.
Among the recommendations:
- Max out your tax-deferred savings: “If you have your own business, you have several choices of tax-favored retirement accounts, including Simplified Employee Pensions (SEPs) and individual 401(k)s.”
- Tap into an IRA: “If neither you nor your spouse participate in a workplace retirement plan, then you can contribute $5,500 to an IRA and wham, take that off your taxable income – even if you don’t itemize deductions.”
- Use a Health Savings Account: The money you put in escapes all federal taxes, growth is tax-deferred, and withdrawals used to pay medical expenses are tax-free.
- Start a business: “Tax reform created a powerful incentive for people to hang out their own shingle and participate in the gig economy.”
- Set up a home office: “Instead of calculating individual expenses, you can claim a standard deduction of $5 for every square foot of office space, up to 300 square feet.”