Everyone wishes to save money on their tax payments in order to save at least a little bit of their hard-earned money. Many of us find it really hard to find a way. But that does not have to be the case. Financial consultant David Justin Urbas has some valuable tips that can be used by anyone to save taxes. Have a look below.
Simple Methods To Save Taxes That Anyone Can Follow
1. Launch a business – If you are aiming to save on taxes, this is one of the most wise decisions. This is because you can allocate your earnings to your business books, as opposed to showing it as an income. In addition to that, you can count off costs involved in businesses as expenses. Many US residents become entrepreneurs and save considerable amounts on taxes.
2. Benefits for parents – If you have a child, you are entitled to certain core benefits as per the taxation rules and guidelines. Child care costs, and tax credits can come to your aid. Parents can actively save on their taxes till the time a child grows up, and is at an age where they can be self sufficient.
3. You might be eligible for credits – Credit or income tax credit is a valid way of saving on tax payments. If you happened to fall in the group of low or average income earners, you can earn considerable credit. This is mainly for people who make a sub $50,000 taxable income. New parents who fall under that income limit are also eligible for credits. It is up to the taxpayer to understand if they are eligible for such benefits, and to claim them.
4. Prolong your mortgage to save more – This is another way to save up on those precious dollars when tax time comes around. It is a smart strategy to prolong the time of your mortgage payments, as such payments fall under the deductible category. Homeowners can use this method to make considerable savings.
5. Retirement funds – If you haven’t yet considered IRA and 401Ks, maybe it’s time to start. Shoving set amounts of money at source, to your retirement accounts is a sound strategy. It reduces your adjustable gross, and therefore the amount on which you are to be taxed. In fact it’s a n obvious win-win situation for working professionals. You can reap the benefits of all those savings in the future, and that money keeps growing too.
6. Don’t clear out student loans – Many of us are advised to clear out or student loan amounts as soon as we can. But that not be the smartest strategy, if you are hoping to save on the tax dollars. If you’re making 65k or less a year, you’re better off treating loan amounts as source deductibles before taxable AGI. That is why it becomes important to pay off your student loans in a systematic manner, instead of in bulk.
7. Make donations for charitable causes – If you’re up for it, donating to charitable causes is a good way of qualifying for tax deductions. It is important to ensure that you have documented proof i.e. receipts, of such donations, that have to be produced to be eligible.
These are some of the valid methods and approaches that you can adopt to save on tax payments.