As a young family ranging from their early 20s to early 40s, there are plenty of expenses that must be taken care of. Once you start a family, the expenses only increase, and you have a lot to plan ahead as well. While investments seem like the need of the hour, there are plenty of other steps which can help you save on additional taxes and use your income to your benefit. Here are the best ways of tax savings for young families:
1. Get your employer to give you a raise, but smartly
You need to find out if you had too much of a tax refund given to you this year. If the payout was big, then there is a chance that a lot of money is being cut from your paycheck regularly. Get in touch with the concerned department at your employer’s office and see whether you are eligible for more allowances, which will help you save on the tax and get more money on a monthly basis.
2. Figure out how you can get through a health tax break
If a medical allowance is offered to you, ensure you make the most of it. Ask your employer to let you put the highest possible sum in this fund. It will not only help you save on social security taxes and Medicare in the future, but will also largely cut down your taxes in this particular year.
3. Tweak your health flex plan as per your family
You are eligible for a higher medical reimbursement provided you have had a new marriage, a divorce, kids, or basically any detrimental change in the family. As you tweak your health flex plan, you most definitely take care of the medical benefits your company is providing to you as well.
4. Find smarter ways to pay off your child care bills
The government makes plenty of provisions for helping you care for your children. While on average you pay a large chunk of money in child care, it makes sense to use the child care reimbursement, in which you can use pre-tax dollars. Child care expenses can be availed at almost one-third of the cost with pre-tax dollars, provided you know how to use it.
5. Try investing in a Roth 401(k)
If the taxes have largely increased now, there is a chance that they will keep growing upward in the future as well. If you want to ensure that you are not really in a soup in terms of retirement savings, you can most definitely save by parking your funds in a Roth 401(k). It will help you keep funds aside for your future; you will also be able to achieve great returns on the plans.
There are plenty of ways to ensure tax savings for young families only if you go about it smartly. Once you navigate your tax savings properly, you will end up saving quite a lot.