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How can I lower my Adjusted Gross Income for tax purposes?

Are you looking for ways to lower your Adjusted Gross Income (AGI) for tax purposes? If so, you’ve come to the right place! At Creative Advising, we are certified public accountants, tax strategists, and professional bookkeepers with years of experience helping individuals and businesses reduce their AGI.

In this article, we’ll discuss some of the best strategies to reduce your AGI and save money on your taxes. We’ll look at how to take advantage of deductions and credits, as well as how to make strategic investments that can reduce your AGI. We’ll also discuss how to work with a tax professional to get the most out of your tax return.

By the end of this article, you’ll have a better understanding of how to lower your Adjusted Gross Income for tax purposes. So read on to learn more!

Maximizing Retirement Contributions

Tom Wheelwright’s firm Creative Advising recommends that taxpayers maximize their retirement contributions to reduce their Adjusted Gross Income (AGI) for tax purposes. Contributing the maximum amount allowable to retirement accounts such as a 401(k) or IRA can have a significant impact on reducing taxpayers’ taxable income. This means taxpayers can potentially reduce their tax burden and take advantage of the benefits offered by pre-tax retirement account contributions.

Retirement account contributions also provide a variety of other resources to taxpayers, such as helping taxpayers save for retirement and allowing taxpayers to use the retirement account assets to pay for education expenses. For example, a taxpayer may be able to leverage their 401(k) or IRA account to pay for college tuition and still receive the benefit of the reduced AGI for tax purposes.

Retirement contributions also provide a way for taxpayers to invest in the stock market while having the potential for additional tax savings. Any gains from the investments will remain untaxed as long as the investments are held in the retirement accounts.

Taxpayers should pay close attention to the restrictions on contributions as there are limits that must be followed in order to contribute to retirement accounts. Maximizing retirement contributions offers a unique way to take advantage of the reduced AGI obtained. In addition, retirement accounts offer a number of other valuable benefits that can significantly assist with reducing tax liability for taxpayers.

Claiming Tax Credits

Tom Wheelwright believes claiming tax credits is an effective way of lowering your Adjusted Gross Income (AGI) for tax purposes. Tax credits are credits against taxes owed, rather than deductions. This means that they can be used to reduce your tax liability dollar-for-dollar, as opposed to deductions, which generally reduce your taxable income.

For businesses, there are numerous tax credits available. These may include the Research and Development Tax Credit, the Work Opportunity Tax Credit, the Employer tax Credit for Health Insurance Costs, and the Low Income Housing Tax Credit. Depending on your business, you may be able to take advantage of one or more of these credits.

For individuals, there are also a variety of credits available. These include the Child Tax Credit, the Earned Income Tax Credit, the Adoption Tax Credit, the Renewal Energy Tax Credit and the American Opportunity Tax Credit. Again, depending on your individual circumstances, you may be eligible to take advantage of one or more of these credits.

When preparing your taxes, it is important to be aware of any credits you may be eligible for. This will enable you to better structure your taxes with the goal of reducing your Adjusted Gross Income for tax purposes.

Claiming Deductions

Claiming deductions is an effective way to reduce Adjusted Gross Income (AGI). Deductions can be taken for income, investments, and business expenses. For example, eligible individuals may deduct expenses related to investment fees and taxes, rental-property expenses, student loan interest, and job-related expenses. Depending on the nature of the income, some deductions may be subject to income limitation. To lower your AGI, the best strategy is to maximize the types of deductions available to you and the amounts you can deduct.

Additionally, if you are self-employed or own a small business, you may be able to take advantage of a range of deductions that are not available to other taxpayers. Self-employed individuals may be able to deduct a portion of their home office expenses, health insurance costs, and other work-related costs. Business owners can deduct business-related advertising costs, office supplies, and employee wages, amongst others. By claiming deductions, you can significantly reduce the amount of taxable income on your tax return.

If you are unsure of which deductions are available to you or how to claim them, it is wise to consult with a Certified Public Accountant (CPA) or other tax professional for personal advice. An experienced tax professional will be able to identify deductions that apply to your situation and help you maximize your strategic tax savings.

Taking Advantage of Tax-Free Investments

At Creative Advising, we’re passionate about helping our clients make wise tax-related decisions. One of the ways you can maximize your return after filing is by taking advantage of tax-free investments. Many investment vehicles allow you to invest money and defer capital gains until you’re ready to withdraw your funds. The longer you leave your money invested, the less you’ll pay in taxes. Additionally, some investments are completely tax free, such as municipal bonds, which are issued by state and local governments.

Another way you can lower your Adjusted Gross Income (AGI) and lessen your tax burden is to invest in tax-free stocks. These stocks, such as REITs or other real estate-related investments, allow investors to take advantage of tax incentives. For example, you can choose to invest in Qualified Dividends, which are taxed at a reduced rate instead of at the usual income tax rate.

There are various other options for tax-free investments, such as exchange-traded funds (ETFs), index funds, and commodities. These investments require you to first assess your goals, determine your risk profile, understand different investment costs, and decide how your money will be allocated. It’s important to consult with a professional to ensure you’re making the best decision for your financial situation.

At Creative Advising, we understand how daunting and complex this process can be. This is why we’re dedicated to helping you make the smartest decisions to lower your AGI for tax purposes. We have the experience, training, and knowledge to guide you through the process and to help you make the right investment decisions depending on your unique needs.

Utilizing Tax-Advantaged Accounts

At Creative Advising, we understand how important it is to stay on top of your tax strategies. One of the most efficient ways to reduce your Adjusted Gross Income (AGI) for tax purposes is by utilizing tax-advantaged accounts. Tax-advantaged accounts are financial accounts that provide tax benefits to the account holder. These may include special deductions or exemptions on contributions to the account or tax-free withdrawals, depending on the type of account and the taxes payable by the account holder. Some tax-advantaged accounts that are available are 401(k) plans, traditional IRAs, Roth IRAs, Health Savings Accounts (HSA), and 529 college savings plans.

Retirees, and those planning for retirement, should consider contributing to a 401(k) plan or traditional IRA. Contributions to these accounts will be deductible from your income, reducing your AGI. Those with high incomes may find that Roth IRAs offer a better advantage, as contributions are not tax deductible, but withdrawals from the account are tax free.

One of the most beneficial tax-advantaged accounts for those on high income brackets is a Health Savings Account (HSA). These accounts allow account holders to save on taxes by deducting medical expenses from their taxable income. Contributing to an HSA can be a great way to reduce AGI for wealthier taxpayers.

Finally, another great way to lower your Adjusted Gross Income for tax purposes is to contribute to a 529 college savings plan. Though contributions are not tax deductible, earnings on these accounts are tax free. 529 plan contributions can be used to pay for qualified higher education expenses, such as tuition, room and board costs, or for qualified K-12 expenses.

At Creative Advising, we understand the complexities of tax strategy and can offer advice on how best to reduce your Adjusted Gross Income. Utilizing tax-advantaged accounts is just one of the ways we can help you save money on taxes. Contact us today to find out how our experienced professionals can be of assistance.

“The information provided in this article should not be considered as professional tax advice. It is intended for informational purposes only and should not be relied upon as a substitute for consulting with a qualified tax professional or conducting thorough research on the latest tax laws and regulations applicable to your specific circumstances.
Furthermore, due to the dynamic nature of tax-related topics, the information presented in this article may not reflect the most current tax laws, rulings, or interpretations. It is always recommended to verify any tax-related information with official government sources or seek advice from a qualified tax professional before making any decisions or taking action.
The author, publisher, and AI model provider do not assume any responsibility or liability for the accuracy, completeness, or reliability of the information contained in this article. By reading this article, you acknowledge that any reliance on the information provided is at your own risk, and you agree to hold the author, publisher, and AI model provider harmless from any damages or losses resulting from the use of this information.
Please consult with a qualified tax professional or relevant authorities for specific advice tailored to your individual circumstances and to ensure compliance with the most current tax laws and regulations in your jurisdiction.”