It’s very difficult for any tax practitioner to give specific tax tips, help or advice without knowing the circumstances of a particular taxpayer’s situation. Good advice ties closely to the specific situation you find yourself in. However, I can provide you with some general help:
If you’re an individual taxpayer, take advantage of any employer-provided pension plans such as a 401(k), SIMPLE-IRA, or 403(b). These retirement accounts typically provide employer matching contributions and tax deductions. You almost certainly have no better investment opportunities. And a word to employers: There’s perhaps no nicer thing you can do for your employees than set up a retirement plan that lets them prepare for their own financial futures.
If you’re starting or running a business, invest the time and money to make sure that you’re using the optimal business form: corporation, partnership, proprietorship, LLC, and so on. Choosing and using the right entity can save you thousands of dollars in taxes each year. Choosing the wrong entity not only adds to your tax bill—it often unnecessarily complicates your accounting. And note: Not everyone should be, for example, an S corporation or an LLC. You can’t simply pick the same business form as your neighbor, your dad, or the company you used to work for. (See the articles on Setting Up a Washington LLC and How to Save Taxes with an S Corporation for more information on these topics.)
Whether you’re an individual or a business, be sure that you have an accounting system (something like Quicken for individuals and QuickBooks for businesses) that captures your tax deductions and business expenses. You can be pretty sure you’re paying more in taxes than you should if you don’t have a good accounting system.
And a final bit of advice: If you’re in the process of some big business or personal event that probably has tax consequences, consult a tax practitioner before you commit to a specific course. Get someone (like me) to help you reduce the tax effects of events like starting, buying or selling a business, getting divorced, setting up a retirement plan, investing in real estate, and so on. Up-front, before-the-fact tax planning can be extremely effective. After-the-fact tax planning isn’t.