It's Never Too Early to Make These 10 Tax Moves

Like it or not, taxes are a part of life, but the financial decisions you make could determine how much -- or how little -- you pay the IRS from year to year. With that in mind, here are a few tax moves it pays to make today.

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Funding a traditional IRA won't just help you save for retirement; it will also help you shave money off your tax bill. If you contribute up to the maximum allowable amount -- $6,000 for those under 50 and $7,000 for those 50 and older -- you'll exempt that much of your income from taxes.

ALSO READ: 5 Overlooked Facts Every IRA Investor Must Know

The annual contribution limits are much higher for 401(k)s than IRAs -- $19,500 for those under 50 and $26,000 for those 50 and over. As such, you may not be able to max out your 401(k), but if you make an effort to boost your savings rate, you'll lower your tax bill. Traditional 401(k) contributions, like IRA contributions, are made with pre-tax dollars, thereby lowering your overall tax bill.

If you're enrolled in a high-deductible health insurance plan, you may be eligible to contribute to a health savings account, or HSA. With an HSA, your money goes in tax-free like a traditional IRA or 401(k), so there's immediate savings to be reaped. Meanwhile, you can withdraw your funds immediately to cover near-term medical expenses, or keep that money invested and use it in the future. HSAs currently max out at $3,550 for individuals and $7,100 for families, and those 55 and over can put in an additional $1,000.

If you itemize your taxes, you should know that contributing money to charity will give you a larger deduction to claim. But tax benefits aside, supporting worthy causes is a benevolent thing to do, especially at a time like this.

ALSO READ: This Secret Saver's Tax Credit Gets More Attractive in 2021

It's not just monetary donations that are tax-deductible. You can also donate unwanted goods -- like furniture, clothing, toys, or electronics -- and claim a tax deduction provided those items are received by a registered charity. That said, you can only claim the fair market value of those goods for tax purposes; you can't claim their original value when you bought them.

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If you have underperforming stocks in your portfolio that are unlikely to get back to their original value, selling them off could benefit you taxwise. You can use a loss in your portfolio to offset capital gains on stocks you sell at a profit, and beyond that, investment losses can also be used to offset up to $3,000 of ordinary income per year.

If you own a business or work on a self-employment basis, you're eligible to deduct expenses that allow you to earn money, like travel, equipment, and office supplies. It's always a good idea to keep thorough records and continuously organize your receipts so you're all set to claim your deductions during tax season.

ALSO READ: What Would Your Tax Rate Be Under Biden's Plan?

Investing in bonds is a good way to generate steady interest income that you can either use or reinvest. But when it comes to taxes, municipal bonds have the edge over corporate bonds. That's because municipal bond interest is always tax-exempt at the federal level, and if you buy municipal bonds issued by your state of residence, you won't face state or local taxes, either.

Saving in a 529 plan is a good way to help pay for college once your children are ready for it. Though there's no federal tax break for funding a 529, some states offer their own tax incentives, so it pays to see what your state's rules look like.

If you typically get a substantial tax refund from the IRS, it may be time to adjust your withholding by claiming more allowances on your W-4. That way, you'll collect more money as you earn it. And if the opposite holds true -- you've been owing the IRS a lot of money during tax season -- you may want to make some adjustments and claim fewer allowances for a better shot at breaking even.

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A lot of people don't focus on taxes until it's time to sit down and file a return. The reality, though, is that it's never the wrong time to focus on tax matters, especially since the right moves on your part could result in a world of savings.

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