Do you want to save money on taxes in 2021? Then check out these five tips to help you do it with several different taxes you’ll pay this year.
- Max out your 401K
If you can afford it, it’s worth contributing the maximum to your 401(k) in 2021, which is $19,500. If you’re 50 or older, you can invest an additional $6,500. The contributions help lower your taxable income.
- Take advantage of your HSA
Health Savings Accounts allow $3,600 in contributions for single people and $7,200 for a family. All of the contributions are deductible. The money can be invested like a 401(k). Your withdrawals are tax-free, and any money you don’t use can be left in the account and withdrawn for any reason after age 65.
- Deduct eligible healthcare costs
Did you know that you can deduct healthcare costs from your taxes? Yes, anything that exceeds 7.5 percent of your adjusted gross income is eligible for deduction. That figure includes items like eyecare costs and dental care.
- Review tax withholding
Do you remember what you put down for withholding when you filled out your paperwork for your job? If you’ve gotten married or divorced, had a child, or bought a home, your withholding status may have changed. Reduce the chances of having too little withheld from your check, which will create a bigger tax bill. You never know. You may even be entitled to have more money in your paycheck each week.
- Get commuter benefits
If you don’t have them yet, ask your employer to sign up for commuter benefits for you and your colleagues. Commuter benefits allow you to save up to $270 in your paychecks, each money tax-free. You spend the money on commuting costs like mass transit, rideshares or qualified parking. Your company will save money because payroll taxes will decrease, with companies saving up to $40 per employee per month.
And if mass transit commuting is not right for you at this time, we also offer a full range of micromobility transportation options. You can take bikes, e-scooters and mopeds for your commute with a prepaid card.
There are many ways to save money in 2021. If you’d like more information on how commuting can play a significant role in doing that, schedule a 15 minute call with a member of our team.