What can I do as a W2 employee to minimize my tax burden for 2025?

Thanks for the detailed response. I'm confused about the health insurance deduction - so I can only deduct it if I itemize AND only the amount over 7.5% of my AGI? That seems like I'd barely get any deduction at all. My company doesn't offer an HSA option unfortunately, but I'll look into the IRA contributions. What's the difference between traditional and Roth?

You're right that the medical expense deduction can be limiting - that's why many W2 employees don't get much benefit from it. The 7.5% threshold means if your AGI is $60,000, only medical expenses (including insurance premiums) exceeding $4,500 would be deductible, and only if you itemize instead of taking the standard deduction. For IRAs, the main difference is when you get the tax benefit. Traditional IRA contributions may be tax-deductible now (reducing current year's taxes), but you'll pay taxes when you withdraw in retirement. Roth IRA contributions aren't deductible now, but qualified withdrawals in retirement are completely tax-free. Your income level and whether you have a retirement plan at work affect traditional IRA deductibility, so check those limits.

Did it actually save you money beyond what TurboTax or an accountant would find? I'm always skeptical of these tax tools because they all claim to find more deductions but end up recommending the same basic stuff.

How does this compare to other tax software? I've used FreeTaxUSA in the past but it doesn't really give optimization advice, just helps me file what I already know about.

It definitely saved me more than TurboTax did the previous year. What made the difference was that it's not just filing software - it actually analyzes your specific situation and documents to recommend strategies you might not know about. For example, it helped me realize I could deduct some home office expenses related to my side gig that I didn't think qualified. The main difference from regular tax software is that it's focused on planning and optimization rather than just filing. It suggested I adjust my W4 withholding in a specific way, recommended exactly how much to contribute to my HSA, and identified some work expenses my employer wasn't reimbursing that were actually deductible. Most tax software just processes what you input rather than suggesting optimizations.

Wait, you're saying this service somehow gets you through to the IRS faster? How does that even work? I thought everyone had to wait in the same queue no matter what.

Sounds like BS to me. Nobody can magically skip the IRS phone queue. They probably just keep calling on your behalf which you could do yourself for free. Did you pay for this "service"?

It doesn't skip the queue - they have an automated system that navigates the IRS phone tree and waits on hold for you. When they finally reach a human, they call you and connect you. It's basically like having someone wait on hold so you don't have to. Yes, there is a cost involved but it was worth every penny for me because I was able to keep working instead of wasting half my day on hold. Sure, you could do it yourself, but the time savings was substantial - especially during tax season when wait times can be 2+ hours.

Do employers have to offer these benefits or is it optional? My company is pretty small (about 30 people) and I don't think we have any of these options.

These benefits are completely optional for employers to offer - they're not required by law. Smaller companies often don't offer as many pre-tax benefits because there's administrative overhead to manage them. However, it's always worth asking your HR department if any pre-tax benefits are available that you might not know about. Sometimes smaller companies offer different perks like simplified employee pension plans (SEPs) or SIMPLE IRAs instead of 401(k)s, which can still help reduce your tax burden.

Municipal bonds can be a good strategy, but remember they typically have lower returns compared to taxable investments. They make the most sense if you're in a high tax bracket. If you're in the 22% bracket or lower, you might actually come out ahead with taxable investments even after paying the taxes.