Save More & Pay Less Taxes¹

When you've worked so hard for your money, handing it over to pay taxes can really sting. But there are a lot of ways to lower your tax bill and keep more of that cash for yourself. Here's how to start:

Use tax-advantaged accounts to save for college and retirement.

Your contributions to a 401(k) or 529 college savings plan could lower your take-home pay a lot less than you think. Check with your HR department for help figuring out the specifics.

If you invest, hold your securities for more than a year.

Instead of paying normal federal income tax on your earnings, you'll pay long-term capital gains tax—just 10% or 15% (depending on your tax bracket).

Invest in professional tax preparation.

A pro could unearth tax deductions that you would have missed, lowering your tax bill.

Look for deductions before December 31.

Be sure to make your charitable donations before the end of the year so you can take the deduction on this year's taxes.

Keep good records.

Don't fool yourself into thinking you'll remember all those deductible expenses in April. You might consider using software (like Quicken or Money) to track your deductions throughout the year. When you file taxes, that information could save you trouble and money.

Adjust your withholdings and put the "extra" to work for you.

Instead of looking forward to a big tax refund in the spring, make sure you're paying the correct amount in the first place. But be careful not to spend that "found money." Instead, set an automatic transfer to move the money from your checking to savings each payday. Before long, you'll have a nice nest egg—and you won't have to wait until spring to do something with it.