Tax season is upon us, and most people’s first question is what they can do to pay less. The key to a lower tax bill is reducing your taxable income. Several financial maneuvers will achieve this result. For example, you can top off your 401(k) or IRA contributions, sell off losing investments from a taxable account, or ask that your employer hold off on paying you a bonus until after December 31.
Another excellent way to reduce your taxable income is to donate to charity. If you itemize your deductions and give money or property to a qualified organization, the value of the contribution can be deducted from your income.
In addition to giving during your lifetime, you may also want to include one or more charitable bequests in your will. This is a noble gesture, regardless of the amount, but chances are it won’t reduce your tax bill after you are gone.