With 2013 near its end, it's time for year-end tax planning moves to pay the IRS less next April. One key to paying less tax is reducing your taxable income as much as possible. Doing so requires knowing some little-known tips.
In the following video, Dan Caplinger, The Motley Fool's director of investment planning, runs through three ways you can cut your taxable income and pay less tax. Dan notes that contributing to a 401(k) can cut your income, reducing what your employer reports on your W-2 form to the IRS. He also runs through some deferral strategies, with special attention to those receiving bonuses or who own their own businesses. Finally, Dan reveals the requirements that Franklin Templeton (NYSE: BEN ) , T. Rowe Price (NASDAQ: TROW ) , and other mutual fund companies face and how they can affect your taxes if you own shares of their funds.
Another great reason to get tax-smart
It's true that 401(k)s cut your taxable income now, but they're also instrumental for your retirement. Yet while investors tend to be impatient with their retirement investments, your best strategy is to buy shares in solid businesses and keep them for the long term. In the special free report "3 Stocks That Will Help You Retire Rich," The Motley Fool shares investment ideas and strategies that could help you build wealth for years to come. Click here to grab your free copy today.