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Reality Check: Cut Your Taxes

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ASHEVILLE, NC -- This tax season, could you be missing out on big savings by overlooking some simple steps to cut your tax bill?

Tax experts like to say that depends because everybody's individual situation is different.

But we've come up with five of the best ways to cut your taxes that could save you hundreds or even thousands of dollars.

Saving for the golden years may be the very best way to cut your taxes. This year, the IRS has increased IRA and 401K contribution limits, as much as $24,000. That's money you put away, pre-tax, that lowers your taxable income.

Mickey Dale, Vice President of taxation services at the CPA firm Johnson Price Sprinkle, helped News 13 discover the best ways to save and said maximizing retirement plans can create huge savings.

"Especially if the company's making matching contributions, because if you're not contributing and the company matches even a portion of it, you're giving up money," Dale said.

For example, a single person earning $75,000 will owe $10,344 in taxes. If they contribute $5,000 to a qualified retirement account, their tax drops to $9,581, a $763 savings.

Another smart strategy is itemize deductions.

"In order to itemize your deductions, you have to have deductions over $12,600," Dale said. "Because the standard deduction for a couple that doesn't itemize is $12,600."

Some of the most popular itemized deductions are charitable contributions, state and local taxes, property and vehicle taxes, mortgage interest and mortgage insurance premiums.

Then there's your filing status - married and filing jointly or filing single.

Usually a joint filing works best, but filing separately could lower your adjusted gross income to allow for certain deductions that phase out at higher incomes.

Putting money into a health savings acount to pay for medical expenses also reduces your taxes. Those are tax deductible contributions and the withdrawal for qualified expenses is tax free.

Dale said a little tax planning can also save.

Rounding out our top five ways to cut your taxes is bunching or timing expenses to maximize deductions, like real estate taxes.

"So you could defer and pay two years worth in one year, where you're paying some in January and again in December and bunching those deductions so you itemize one year and take the standard deduction the second year," Dale said.

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