It is tax season once again. As a certified public accountant and former IRS agent, people often bombard me with many different questions around this time of the year.
Although it is better to think of ways to reduce your tax liability long before tax time, here are a few last-minute tips to cut your tax bill before April 15.
If you owe more than you expected, consider contributing to a traditional individual retirement account (IRA). An IRA provides a great way to not only reduce your tax liability, but also to save for retirement.
For the 2013 tax year, you can contribute the lesser of $5,500 ($6,500 if you are 50 or older) or your taxable compensation for the year. If you are able to take advantage of this deduction, it can cut your tax bill this spring.
If you own a business, you can fund a retirement account for yourself and your employees through a simplified employee pension plan, or SEP–IRA.
Business owners can contribute the lesser of 25 percent of their compensation or $51,000 for the year 2013, so this deduction can really cut your tax bill.
Review your records
Another great way to get the most from Uncle Sam is to review each bank or credit card statement for the year.
Look for items that can be deducted on the tax return, such as child care expenses, business outlays, home office deductions, charitable donations and other expenses.
This simple exercise is another way to cut your tax liability and boost your refund.
Kemberley Washington is a professor at Dillard University in New Orleans and certified public accountant. She writes a personal finance blog at kemberley.com. Follow her on Twitter: @kemwashcpa.