A Few Tips to Save Money Throughout Your Life

Author: Jenny Shilling 

Throughout your life there are steps you can take that will minimize your taxes and make it easier to achieve financial security. You know the old saying, "A peny saved, is a penny earned." Here are the some of those steps:

• With your first job, contribute to a tax-advantaged retirement plan. It's never to early to start saving up for your retirement. You can cut your current tax bill and get a head start on building up a nest egg for your retirement. Also, statistics show that only 5 out of every 100 retirees are financially independent.
• Filling out your W-4 correctly is very important. If you withhold correctly you should receive the appropriate amount of money in your paycheck. What you do with these funds is up to you. Getting cash back at tax time is not necessarily the goal. When you have the correct withholdings, you have the opportunity to invest your pay and let it grow.
• While you are young, filing your taxes is fairly straightforward. However, you do have the option to take certain deductions besides the standard deduction. You may be able to deduct moving expenses, student loans or health savings account contributions, if they apply.
• As you mature and family becomes a part of your life, homeownership comes into play.  Mortgage interest and real estate taxes may cause you to start itemizing your deductions. If you don't yet have enough deductions to itemize, you can "bunch" certain deductions together into every other year to increase your tax savings.
• If you work and pay for child care you may be eligible for the child care credit. You may also be eligible for the earned income tax credit. There is also the child tax credit for children under age 17.
• If eduction expenses loom ahead, there are many ways to build a college fund to help pay for college expenses. Speaking with your tax preparer is the best way to decide which one is the best for you.
• Hiring your child to work for you is one of the best ways to save money. The business can take a deduction for the wages paid to your child and the child pays little or no tax on his earnings.
• If you happen to provide care for your parent you may be eligible to claim a dependency exemption. You must provide over half of the support of your parent. 
• Invest to take advantage of lower long-term capital gain tax rates. You can cut your tax bill by holding an appreciated investment long enough to qualify for long-term rather than short-term capital gain tax treatment.
• Plan your capital gain transactions. You may save taxes by indentifying the stock you're selling and choosing the stock with the hiyghest tax basis.
• Consider tax-exempt investments as a means of cutting your income tax. Comparing the yield on tax-exempt investments with taxable alternatives will show you where to invest.
• Maximize your retirement plan contributions. With employer matching, deductible contributions and tax-deferred growth, you should deposit as much as possible. Save as much as you can while you can.
• Swap investment or business property instead of selling it. If you can exchange property for "like-kind" property in a tax-deferred exchange you can delay the tax until you sell the replacement property. This can be a good way to trade up to more valuable property. Speaking with your tax preparer is highly advised before undertaking such a prospect.
• When you borrow money, see if you can set up the loan in such a way as to have the interest be deductible. Business, home mortgage and investment interest is all deductible. 
• Retirement brings about the payout of your retirement plan. You have the option to roll it over into an IRA or to do something else entirely. Speaking with your financial planner or tax advisor is suggested prior to making a decision.

Whenever you make big decisions about financial and tax planning, you should consider speaking with a professional tax specialist. From youth through retirement all of the choices you make can have an affect on your financial future. Consider the suggestions in this article and if you have any questions, please contact us to discuss the tax cutting options most suited to your particular situation.