To get a jump on next year’s taxes, make sure you are taking full advantage of all salary reduction plans available through your employer. When tax time rolls around again, you’ll be glad you took a few minutes to make small changes that pay big.
Your first priority is to max out your 401k contributions if this is an option your employment offers. Remember to invest enough in your 401k to get any company match, typically an extra 6% or more annually based on your contribution.
Many employers also offer pre-tax deduction options such as flexible spending accounts for medical expenses, child care costs, and public transportation fees. By paying for these expenses before taxes, you are actually paying less in the long run.
For example, if you contribute $2,500 to your flexible spending account, you do not pay taxes on that money. You need to remember to go through the reimbursement process, but it costs you less to go this route.