3 Tax Savings Tips Your Wallet Will Thank You For

It's that time of year again when many of us become amateur accountants. The calculators come out, the dining table is littered with paperwork, and gathering old receipts becomes an Olympic sport. Of course, we can only be referring to tax season. Beyond basic deductions, we've got three tips you might not have considered that could save you money on your taxes. Please consult your tax advisor for complete information.

1. Make an IRA Contribution One of the easiest way to save on taxes is to make a contribution to a qualified retirement account like an IRA. Individuals under age 50 can contribute up to $6,500, and that amount rises to $7,500 for those 50 or older. Contributions to a traditional IRA are generally deducted from your taxable income immediately, which can lower your tax bill. Plus, you’re saving for the future! You have until April 18, 2024 to make an IRA contribution that you can deduct from your 2023 taxes.
2. Turn Passion into a Tax Perk Did you know your hobby could potentially give you a tax break? Whether you breed rare orchids or make diamond art paintings, certain unusual hobbies may qualify for deductions. Remember, the key is to show that your hobby has the potential to turn a profit. So, if you've been folding paper cranes like there's no tomorrow, talk to your tax advisor—you may be able to turn that passion into a tax deduction.
3. Unleash the Power of Education Credits If you or your dependents are in school, don't forget about the tax credits for education expenses. The American Opportunity Credit can get eligible students up to $2,500 each for qualified education expenses like tuition, fees, and course materials. This credit can be claimed for the first four years of college. The Lifetime Learning Credit can give qualified taxpayers up to $2,000 per tax return for education expenses at an eligible institution. Unlike the American Opportunity Credit, there's no limit on the number of years this credit can be claimed.

When it comes to tax preparation, don't get lost in what's due, but rather, explore where you can save. At Financial Partners, we know that no two financial journeys look the same, which is why we're here to empower your unique financial journey.