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Erin from Broke Millennial highlights ways to
legally reduce how much you pay in taxes.

IRA contribution limits
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution -limits

IRA deduction limits
https://www.irs.gov/retirement-plans/ira-deduction-limits

Determining fair market value on clothing donations:
https://goodwillnne.org/donate/donation-value-guide/

See if you’re eligible for free filing:
https://apps.irs.gov/app/freeFile/jsp/wizard.jsp

https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free

529 Saving Plan tax deduction calculator
https://vanguard.wealthmsi.com/stdc.php

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Hi, I’m Erin from Broke Millennial for The Financial Diet.

Welcome to The Three-Minute Guide, brought to you by Skillshare. The cliche is true: the only two guarantees in life really are death and taxes.

While tax evasion is always a bad idea, there are some moves you can make to reduce your taxable income and therefore legally pay less in taxes. First up: contribute to a retirement plan through your work. In 2018 you can contribute $18,500 to your 401(k) or 403(b).

That’s a huge way to reduce your taxable income! Just remember, you will have to pay taxes on that money when you take it out in retirement if it’s a traditional 401(k). Not able to max out your 401(k)?

Totally normal. Instead consider just increasing your contribution by 1%. You barely will feel a pinch in your paycheck and it's a great way to reduce your taxable income for this year.

Next option: contribute to an IRA. Not eligible to contribute to a retirement plan through your work? Me either.

Instead, consider using an IRA. In 2018 you can contribute $5,500 to a traditional or Roth IRA. Even if you do have a retirement plan at work, you still may be able to contribute to that and an IRA and still get the full deduction.

A Roth IRA can be a great financial move, but it doesn’t lower your tax liability today. Think about whether or not it’s best to get the benefit now or wait to be able to take your money out in retirement tax free. A big perk of the IRA is that you have until filing deadline to actually contribute.

For example, if you’re trying to lower your 2017 taxes, you can still contribute to an. IRA until April 17th of 2018. Most tax deductions require that you do them in the year for which you’re filing.

Let’s talk Charitable giving It isn’t only a good life practice, but also can help lower your tax liability. You must donate to a charity that’s recognized by the IRS, which is usually noted with a 501(c)(3) status. Use sites like CharityNavigator, GuideStar, and GiveWell to make sure you’re contributing to legitimate organizations.

Did you know you could also get a tax deduction for donating items to organizations like the. Salvation Army and Goodwill? You can only deduct what is known as fair market value, not the full retail price of your item and be sure to to get a donation receipt.

We’ve linked to a guide about how to determine fair market value in the description below. Get a tax deduction by saving for your child’s education expenses. 529 Plans are a great way for parents to be able to save for their child's future education expenses. The only bummer, you don't get a federal deduction.

However, 30 states do offer deductions on state income tax. Finally, be sure to check your employee benefits to see if there's any other ways you could possibly reduce your taxable income. Are you eligible to contribute to a health savings fund or flexible spending account?

Do it! The HSA especially is a great way for you to save for medical expenses both this year and in the future. Pre-tax transit cards or commuter benefits are another great way to use your pre-tax dollars to fund things like your metro card or your parking space and lower your taxable income.

Your goal may be to legally pay less in taxes, but you probably want to earn more income too. An easy and affordable way to expand your talents is with Skillshare. Every week, we're featuring a different Skillshare class we think you guys will love.

This week, we're talking about Lifestyle Photography: Capturing Inspiring Visual Stories. Hosted by food and lifestyle photographer Marte Marie Forsberg, this 20-minute online class will teach you to capture stunning stories in a styled yet natural way, whether you're photographing for a blog or Instagram, or simply want to capture a beautiful meal. As always, though, Skillshare offers a huge range of classes on everything from writing to fitness to business, and it's all about what you want to learn, at an affordable annual subscription of less than $10 a month.

And since Skillshare is sponsoring this video, the first 500 people to use the promo link in the description will get their first 2 months for 99¢. Click the link in the description to check out this week's featured class, or any of the other classes Skillshare has to offer. Have a money question you want to learn more about?

Leave your topic idea in the comment section below. I’m Erin from Broke Millennial for The Financial Diet and don’t forget to be here next Thursday for a new 3-Minute Guide!