It’s a pretty sure thing that taxes are here to stay and there’s not much you can do about it. So, with that in mind the next best thing to do is just to make sure you’re doing the best you can. Here are some tips on what to do.
One of the best things you can do to help yourself is to max out your retirement plan contributions. Any time you fund a traditional IRA or 401(k), the money you put in is exempt from taxation for the year you make that contribution. In other words, if you put $1,000 into your 401(k) this year, you won’t pay taxes on that $1,000 of income when you file your 2018 return. Better yet, if you manage to max out your IRA or 401(k) for the year, you’ll shield that much more money from the IRS.
It’s always best just to report all of your income. A lot of people have side jobs these days and there’s nothing wrong with that. Trying to make a little extra side money is a good way to make ends meet but don’t make the mistake of not reporting that income. Any time you earn $600 or more from a given employer, you’ll receive a 1099 form summarizing those payments.
If you have investments remember about the difference between short term and long-term capital gains. If you hold your investments for at least a year and a day before selling them, you can avoid short term capital gains taxes which are significantly higher than the short-term taxes. Long term capital gains taxed as ordinary income, which means you’ll pay the same rate as you would on your typical paycheck.
Paying taxes are just a part of modern living and there’s little you can do to avoid them, so you might as well do the best you can with what you have.