5 Tax-Saving Strategies to Keep More of Your Money

Charles Helme |
Categories
Tax Planning
Retirement

Tax season doesn’t have to feel like an uphill battle. With the right strategies, you can minimize your tax bill and keep more of your hard-earned money where it belongs, in your pocket.

Whether you’re a DIY tax filer or rely on a pro, understanding these key moves can help you make smarter financial decisions and sidestep costly mistakes. Let’s dive in.

1. Adjust Your Withholding to Avoid Surprises

Getting a big refund might feel like a win, but it actually means you’ve been giving the government an interest-free loan all year. On the flip side, underpaying could leave you with an unexpected tax bill.

How to Stay on Track:

  • Review your W-4 regularly, especially after life changes like marriage, divorce, or a new job.
  • Use the IRS Tax Withholding Estimator1 to check if you’re on target.
  • Consult a tax professional to dial in the right balance.

2. Make Estimated Tax Payments (If You Need To)

Freelancers, business owners, and investors don’t have taxes automatically withheld need to make estimated tax payments. Skip them, and you could face penalties.

Key Deadlines for Estimated Taxes:

  • April 15: For income earned from January 1 to March 31.
  • June 15: For income earned from April 1 to May 31.
  • September 15: For income earned from June 1 to August 31.
  • January 15: For income earned from September 1 to December 31.2

How to Stay on Track:

  • Use IRS Form 1040-ES to calculate and submit estimated payments.3
  • Consider setting aside a portion of your income for taxes to avoid financial strain at tax time.
  • Automate payments through IRS Direct Pay or Electronic Federal Tax Payment System **(**EFTPS) to avoid missed deadlines.4

3. Maximize Tax-Advantaged Accounts

Certain accounts allow you to reduce your taxable income, meaning you can keep more of your money now while saving for the future.

Recommended Accounts for Tax Savings:

  • 401(k): Contributions lower your taxable income (plus, free money if your employer offers a match).
  • Traditional or Roth IRA: Traditional IRAs may provide tax deductions, while Roth IRAs offer tax-free growth.
  • Health Savings Accounts (HSA): Contributions are tax-deductible, grow tax-free, and can be withdrawn tax-free for medical expenses.
  • Flexible Spending Account (FSA): Similar to an HSA, but use-it-or-lose-it by year-end.

Pro Tip! Automate your contributions to stay consistent.

4. Claim Every Tax Deduction and Credit You Qualify For

Deductions reduce your taxable income, while credits provide a dollar-for-dollar reduction on what you owe. Don’t leave money on the table!

Common Tax Benefits:

  • Saver’s Credit: Available to qualifying taxpayers contributing to retirement accounts.
  • Student Loan Interest Deduction: Allows eligible taxpayers to deduct up to $2,500 in interest paid.5
  • Energy-Efficient Home Credit: Potential savings for qualifying, eco-friendly home improvements.
  • Self-Employment Deductions: Includes home office, internet, phone, and travel expenses.
  • Charitable Contributions: Some donations may be deductible, even for those who do not itemize.

How to Stay on Track:

  • Keep detailed records of expenses and receipts throughout the year.
  • Review IRS guidelines or consult a tax professional to confirm eligibility for deductions and credits.

5. File on Time to Avoid Penalties

Procrastinating on your taxes? The IRS doesn’t take kindly to that. Failing to file or missing the tax deadline may result in penalties and interest charges. The IRS typically imposes a penalty of up to 5% per month on unpaid taxes, up to 25% of the total owed.5 Ouch!

How to Stay on Track:

  • Mark tax deadlines in your calendar and set reminders, especially for April 15th.
  • If you need extra time, request an extension using IRS Form 4868.
  • If you owe taxes and cannot pay in full, consider setting up an IRS payment plan rather than ignoring the issue.

Bonus Tip: Adjust for Life Changes

Major life events like marriage, a new job, having a child, can impact your tax situation. Make proactive adjustments along the way to optimize your tax strategy.

How to Stay on Track:

  • Update your W-4 with your employer after big life changes.
  • Check eligibility for new deductions or credits, such as the Child Tax Credit or Mortgage Interest Deduction.
  • When in doubt, consult a tax professional for personalized tax planning guidance.

The Bottom Line

Smart tax planning isn’t just about April 15th, its about making strategic moves year-round to keep more of your hard-earned money. By making informed decisions about withholding, estimated payments, tax-advantaged accounts, and deductions, you can better manage your tax liability.

Keep in mind that while these strategies may help reduce your tax burden, individual circumstances vary. Consulting a tax professional or reviewing IRS resources can help ensure you are making the most of available tax-saving opportunities.

Sources:

  1. IRS, 2025 [URL: https://www.irs.gov/individuals/tax-withholding-estimator]
  2. IRS, 2025 [URL: https://www.irs.gov/faqs/estimated-tax/individuals/individuals-2]
  3. IRS, 2025 [URL: https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes#:~:text=How to pay estimated taxes]
  4. IRS, 2025 [URL: https://www.irs.gov/taxtopics/tc456]
  5. IRS, 2025 [URL: https://www.irs.gov/payments/failure-to-pay-penalty]

This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2025 Advisor Websites.