How to Pay Less in Taxes (Legally, that is..)

(Please note, this page may contain affiliate links and we may earn fees from qualifying purchases at no additional cost to you. See our Disclosure for more info.)

It’s a new year, and all thoughts eventually turn to taxes. January is the perfect time to understand last year’s tax implications and plan your strategy… for next year.

Often when one thinks of how to write a smaller check (or get a larger refund) on April 15 th, the emphasis is on tax deductions. The reality is that, according to the Tax Policy Center, almost 90% of tax filers now use the standard deduction.

The 2017 increase in the standard deduction means the typical non-business-related deductible expenses (mortgage interest, state and local taxes, charity) are less useful as itemized deductions.

For most W-2 wage earners, paying less in taxes is not about finding obscure deductible expenses but rather declaring less taxable income. The actions you need to take for that strategy to work are best decided upon before the first hints of spring.

Taxes on Your Income

First a few important definitions:

• Adjusted Gross Income (AGI) — Your gross income from wages, tips, dividends, capital gains, business income, retirement distributions, and…