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How the average person can save money quickly and easily

Top Tips on how to Save on Taxes

How to Save on Taxes

How to Save on Taxes

It’s hard to find anybody who doesn’t dread tax time and we all want to know how to save on taxes. After all, most of us don’t expect the IRS to be the nice or friendly type when it comes to paying taxes. But there are a wide variety of deductions that are major avenues to save on taxes. Planning in advance is the key to tax savings for most workers.

A survey conducted earlier this year found that 54% of Americans think saving on taxes is the most important financial issue. The increasing prices of groceries, utilities, health care and education make it tough to save much of anything, leaving little room. There are smart moves that consumers can take advantage of to pay less in U.S. federal taxes.

1 -Earn Tax Free Income

Not all kinds of incomes are taxed, and knowing this is another answer on how to save on taxes. There are several tax-free income sources that can help you save a considerable amount of money. One smart idea may be to invest in insurance policies that provide holders tax-free status. Purchasers need to ensure that you pick the right insurance policies with higher benefits. Obtaining tax-free benefits from an employer in the form of a IRA may also go a long way towards saving hard-earned income.

2 – Mortgage Your Home 

Mortgage interest payments and state property taxes are tax-deductible in the U.S. Extending a mortgage during your working life could save consumers money on taxes. However, the trade-offs and burden of having to pay for a loan their entire working life is a major consideration. Income earners also have to evaluate whether the tax savings for a mortgage is worthwhile for their own financial circumstances.

3 – Start a Small Business

How to Save on Taxes

How to Save on Taxes

Turning yourself into an entrepreneur starting a small business will help resolve tax issues as you have better control over deductions. Business owners, however, usually keep investing more money into their business rather than withdrawing profits for the first several years. If you don’t make a profit then you can use the expenses as a tax loss.

4 – Track Medical Expenses

Medical expenses such as surgeries, doctors visits and prescriptions are all tax-deductible. However, if you get a cosmetic surgery done, it cannot get you an exemption per the IRS. Similarly, non-prescription drugs and vitamins cannot be claimed for deductions. It is important to retain the receipts of all tax-deductible medical expenses in order to prove an exemption in case of an audit.

5 – Move to a New City

If you had to move to a city or destination more than 50 miles from your previous location for a new job, you have just got yourself a tax-exemption for moving costs. You can also get an exemption for your airfare and other expenses that you may have incurred during the move. There are a variety of other deductions that can be taken to maximize tax deductions, which can be learned from a tax accountant.

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