How to Save Money on Your Taxes

When it comes to the question of paying taxes, we all do it reluctantly. In fact, most people would tell you how they wished taxes were not mandatory. In case you never knew, there are ways through which you can save. You only need to identify the right tools and you could end up saving on taxes. Below are a handful of tips on how to save money on your taxes.

  • File your returns on time: It is one thing to file returns and it is a different ball game when making payments. You may not be in a position to pay taxes at once. Whether you pay in installments or not, one thing that will greatly assist you is sticking to the time stipulations. This will keep you away from penalties associated with late returns.
  • Hire an accountant: Some people reckon that accountants are expensive. Hence, they opt to file for taxes on their own. There is no harm in doing that. However, an accountant can also teach you how to save money on your taxes. If you want to avoid paying more taxes than you need to, let a qualified person do it for you. Never mind the fee this person is charging. Had he/she not come to your rescue, you could end up with a tax liability that surpasses the professional fees charged.
  • Learn how to keep records: The income tax filing system provides for deductions and credits. However, in order to enjoy any of these facilities, you should have good records to make reference. Devise a way of gathering the information that could prove useful to your tax preparation. For instance, you can have a mileage book in the car and a box file for your receipts. When it comes to filling in the deductions part, it becomes so easy since you have a reference point.
  • Donations to charity: Helping people in need can lead to some tax savings on your part. Your philanthropic act of donating books, toys, clothes, electronics and so on could lead to some deductions on your part. All you are supposed to do is to have a list that is accurately maintained showing all the items you have been donating. For every donation worth $250 and above, you should obtain a receipt. If you want to know more about the donations that are deductible from your tax liability, check with the IRS or visit their website.
  • Retirement savings: People who have started putting aside some money to see them through retirement stand to benefit from such savings. You too can take advantage of the incentives available. Start now. Any contributions you make to a retirement scheme managed by an employer are not subjected to taxes. If you have been contributing, increase the contributions.
  • Going green: Energy saving equipment installed in homes usually attracts tax credits. For example, water heaters and electric systems that run on solar power can earn you credits of up to 30%. Find out from the IRS, which other green energy alternatives fall in this category and cash in on them.
  • Non performing stocks: If you have some investments in stocks and reckon that they are not performing well, dump them. It is not an easy thing to deal with losses, but the stocks have not been performing for all this time. The losses you incur as a result can be carried forward for tax purposes.

Learning how to save money on your taxes calls for you to be vigilant on the small things you do on a regular basis. You only need to find where the loop holes are and maximize on it.

Category: Tax

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