Tax Shelters to protect your money. When it’s time to settle with Uncle Sam at the end of the year, don’t overlook some IRS approved tax shelters that might lower your tax bill. Set up a retirement account to lower your taxes. A 401K or other type of tax deferred retirement account like an IRS allows you to save money on taxes now by deferring to pay taxes in retirement when your income and tax bracket are likely lower. For the 2018 tax year, you were able to contribute up to $5500 to a traditional IRA or $6500 if you were 50 years of age or older. For 401K investment accounts, you could’ve contributed up to $18,500 for the tax year 2018. Those age 50 or older could’ve contributed up to an additional $6000 in 2018 as a catch up contribution. Remember that your retirement funds will be taxed when you make an early withdrawal, however, there are some exceptions.j
Tax shelters to protect your money. How about opening a health savings account ? One easy way to reduce to tax liability is to open an HSA and set aside an estimated amount each year for your medical expenses. You must have a high deductible health plan to open an HSA. With this HSA, you can use the nontaxable funds to cover out of pocket medical and health expenses for the year. You can make contributions form your paycheck to fund the account and spend the money as you need it. For 2018, max contributions could’ve gone up to $3,450 if you were single, or up to $6900 if you had a family.
Become an Angel Investor. Angel Investor’s invest in small businesses and startups. Going this route can potentially allow you to take a tax credit and give you a nice return on your investment if the business succeeds. As an angel investor, you might qualify for a state tax credit that enables you to write off a portion of your investment right away. For example, angel investors in Colorado who invest at least $10,000 and meet other eligibility requirements receive a tax credit of up to 30 percent of their investment.