If you’re like most Australians, you may be in search of new, creative ways to ease your annual tax burden. Fortunately, there are several things you can do to cut your taxes or increase the amount of your tax refund without incurring the wrath of the IRS.
Tax credits and allowable deductions come and go as the IRS alters its rules and regulations from year to year. However, there are a number of ways to trim your taxes that are likely to remain applicable for a while. Contribute to a 401k or IRA. Your tax due is based on your adjusted gross income, or AGI. The higher your AGI, the more you owe the government.
ABS Tax’s expertise and knowledge of Austalia and Tax law answers tricky tax questions and being able to better understand the implications of taxation. A very professional team that knows how to save money on tax!
The key here is the word “adjusted,” which refers to the fact that you can reduce this all-important total in a few different ways – one method is to deposit pre-tax contributions into a 401k or other tax-deductible retirement account, such as an IRA.
The more you contribute to your 401k, the more you can reduce your AGI and the amount you owe in taxes. In 2020, the maximum IRA and 401k contribution limits are 5,500 and $18,000 respectively for anyone 49 years of age and under. Anyone 50 and older can add an additional $1,000 to the IRA limit and an additional $6,000 to the 401k limit.