11 Savvy Tax Decisions That Could Save You Thousands

Many people don't think about taxes until they're ready to sit down and file a return. But the more conscious you are of taxes, the less you might pay -- and the more you might save. Here are a few savvy choices that could really work to your benefit.

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Tax filers get a choice between claiming the standard deduction on their taxes or itemizing. It's best to make that decision well ahead of when taxes are due. That way, you can do things like donate more money to charity to maximize deductions if you're itemizing.

ALSO READ: Save More for Retirement With This IRS Tax Break

If you'll be itemizing this year, you may want to bundle deductions for a bigger tax break -- especially if you often find yourself on the cusp between itemizing or going with the standard deduction. That could mean scheduling a medical procedure for December instead of January so you can claim a larger medical expense deduction.

If you're self-employed, you can deduct the cost of expenses needed to run your business. Be sure to keep detailed records so you don't miss out on write-offs.

When you sell investments for more than they cost you, you have to pay taxes on those capital gains. But if you hold your investments for at least a year and a day before selling them, you'll be bumped into the more favorable long-term capital gains category, which means you won't pay as much tax when you sell stocks at a profit.

ALSO READ: Want Social Security to Last? Here's How Much Your Taxes Could Go Up

Buying dividend stocks is a good way to secure a steady income stream. And because qualified dividends are taxed more favorably than ordinary income, you won't increase your IRS burden all that much.

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You may have stocks in your portfolio that are performing poorly. If so, selling them at a loss could lower your tax burden. Not only can you offset capital gains with losses, but you can also offset up to $3,000 of ordinary income per year if you have an excess loss on your hands.

Loading up on municipal bonds is another great way to secure an ongoing income stream. The great thing about these bonds is that you won't pay federal taxes on your interest income. You'll also avoid state and local taxes if you buy municipal bonds that are issued by your home state.

ALSO READ: The IRS Is Rewarding Retirement Savers With Up to $2,000. Do You Qualify?

The money you contribute to a traditional IRA or 401(k) plan will go in on a pre-tax basis. That means you could exempt a nice chunk of your earnings from taxes and reap the savings involved.

If you're enrolled in a high-deductible health insurance plan, you may be eligible to participate in a health savings account, or HSA. Like IRAs and 401(k), HSAs are funded with pre-tax dollars, and the money you put into your account can be carried all the way into retirement so you have a dedicated means of covering healthcare expenses later in life.

If you spend money on medical costs or childcare, it pays to enroll in your employer's flexible spending account program. The money you allocate toward healthcare and childcare expenses will go in on a pre-tax basis so you're not taxed on as much of your earnings.

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The right tax professional could help you find ways to lower your IRS burden even more. Ask friends, family members, and neighbors for recommendations and sit down with a tax expert during the year -- well before your taxes are due.

ALSO READ: Buyer Beware: These 10 States Have the Highest Property Tax in the Nation

Taxes can be stressful on many levels. These moves could leave you with a lower IRS bill -- and more of your hard-earned money to keep for yourself.

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