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Taxes are part of life, but many people would like to know if there are any ways to lower their tax bill.

While paying no taxes isn’t likely, there are ways you can use the tax code to reduce your taxable income and tax liability. These range from knowing the right filing status to maxing out your retirement contributions to understanding which deductions and credits you may qualify for.

Read on to learn some smart strategies for lowering your tax bill without running afoul of the IRS.

1. Choosing the Right Filing Status

If you’re married, you have a choice to file jointly or separately. In many cases, a married couple will come out ahead by filing taxes jointly.

Typically, this will give them a lower tax rate, and also make them eligible for certain tax breaks, such as the earned income credit, the American Opportunity Credit, and the Lifetime Learning Credit for education expenses. But there are certain circumstances where couples may be better off filing separately.

Some examples include: when both spouses are high-income earners and earn the same, when one spouse has high medical bills, and if your income determines your student loan payments.

Preparing returns both ways can help you assess the pros and cons of filing jointly or separately.

2. Maxing Out Your Retirement Account

Generally, the lower your income, the lower your taxes. However, you don’t have to actually earn less money to lower your tax bill.

Instead, you can reduce your gross income (which is your income before taxes are taken out) by making contributions to a 401(k) retirement plan, a 403(b) retirement plan, a 457 plan, or an IRA.

The more you contribute to a pre-tax retirement account, the more you can reduce your adjusted gross income (AGI), which is the baseline for calculating your taxable income. It’s important to keep in mind, however, that there are annual limitations to how much you can put aside into retirement, which depend on your income and your age.

Even if you don’t have access to a retirement plan at work, you may still be able to open and contribute to an IRA. And, you can do this even after the end of the year.

While the tax year ends on December 31st, you may still be able to contribute to your IRA or open up a Roth IRA (if you meet the eligibility requirements) until mid April.

3. Adding up Your Health Care Costs

Healthcare expenses are typically only deductible once they exceed 7.5% of your AGI (and only for those who itemize their deductions). But with today’s high cost of medical care and, in some cases, insurance companies passing more costs onto consumers, you might be surprised how much you’re actually spending on healthcare.

In addition to the obvious expenses, like copays and coinsurance, it’s key to also consider things like dental care, Rx medications, prescription eyeglasses, and even the mileage to and from all medical appointments.

4. Saving for Private School and College

If you have children who may attend college in the future, or who attend or will attend private school, it can pay off to open a 529 savings plan.

Even if your children are young, it’s never too early to start setting aside money for their education. In fact, because of the long-term compounding power of investing, starting early could help make college a lot more affordable.

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A 529 savings plan is a type of investment account designed to help parents invest in private schools or colleges in a tax-advantaged way. While you won’t typically get a federal tax deduction for the money you put into a 529, many states offer a state tax deduction for these contributions.

The big tax advantage is that no matter how much your investments grow between now and when you need the money, you won’t pay taxes on those gains, and any withdrawals you take out to pay for qualified education expenses will be tax-free.

5. Putting Estimated Tax Payments on Your Calendar

While this move won’t technically lower your taxes, it could help you avoid a higher than necessary tax bill at the end of the year.

That’s because Income tax in the United States works on a pay-as-you-go system. If you are a salaried employee, the federal government typically collects income taxes throughout the year via payroll taxes.

If you’re self-employed, however, it’s up to you to pay as you go. You can do this by paying the IRS taxes in quarterly installments throughout the year.

If you don’t pay enough, or if you miss a quarterly payment due date, you may have to pay a penalty to the IRS. The penalty amount depends on how late you paid and how much you underpaid.

The deadlines for quarterly estimated taxes are typically in mid-April, mid-July, mid-September, and mid-January.

For help calculating your estimated payments, individuals can use the Estimated Tax Worksheet from the IRS .

6. Saving Your Donation Receipts

You may be able to claim a deduction for donating to charities that are recognized by the IRS. So it’s a good idea to always get a receipt whenever you give, whether it’s cash, clothing and household items, or your old car.

If your total charitable contributions and other itemized deductions, including medical expenses, mortgage interest, and state and local taxes, are greater than your available standard deduction, you may wind up with a lower tax bill.

Note: For any contribution of $250 or more, you must obtain and keep a record.

7. Adding to Your HSA

If you have a high deductible health plan, you may be eligible for or already have a health savings account (HSA), where you can set aside funds for medical expenses.

HSA contributions are made with pre-tax dollars, so any money you put into an HSA is income the IRS will not be able to tax. And, you typically can add money until mid-April to deduct those contributions on the prior year’s taxes.

That’s important to know because HSA savings can be used for more than medical expenses. If you don’t end up needing the money to pay for healthcare, you can simply leave it in your HSA until retirement, at which point you can withdraw money from an HSA for any reason.

Some HSAs allow you to invest your funds, and in that case, the interest, dividends, and capital gains from an HSA are also nontaxable.

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8. Making Student Loan Payments

You may be able to lower your tax bill by deducting up to $2,500 of student loan interest paid per year, even if you don’t itemize your deductions.

There are certain income requirements that must be met, however. The deduction is phased out when an individual’s income reaches certain thresholds.

Even so, it’s worth plugging in the numbers to see if you qualify.

9. Selling Off Poorly Performing Investments

If you have investments in your portfolio that have been down for quite some time and aren’t likely to recover, selling them at a loss might benefit you tax-wise.

The reason: You can use these losses to offset capital gains, which are profits earned from selling an investment for more than you purchased it for. If you profited from an investment that you held for one year or less, those gains can be highly taxed by the IRS.

This strategy, known as tax-loss harvesting, needs to be done within the tax year that you owe, and can help a taxpayer who has made money from investments avoid a large, unexpected tax bill.

The Takeaway

The key to saving on taxes is to get to know the tax code and make sure you’re taking advantage of all the deductions and credits you’re entitled to.

It can also be helpful to look at tax planning as a year-round activity. If you gradually make tax-friendly financial decisions like saving for retirement, college, and healthcare throughout the year, you could easily reduce your tax burden and potentially score a refund at the end of the year. If you do score a tax refund, you can put it to good use, paying down debt or earning interest in a bank account.

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SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

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