If you have yet to file your taxes, you probably want to know every way possible to cut down on the tax burden. After all, nobody enjoys paying taxes, but it is necessary for all of the services provided throughout the country.
Thankfully though, there are several different legal ways you can go about cutting down your tax bill.
Did you know some of your income and benefits may not be taxed at all? You can deposit some money into a tuition plan for your child. This instantly becomes tax-free and your child reaps the benefits. You can do the same with a health savings account or health benefits and life insurance, all of which are tax-free.
It is possible to cut your tax bill by spending some money. Employers do this all the time by taking money they might be saving up and putting it towards medical expenses or dependent care. This is best done if someone is right over the top into the next tax bracket and they need to drop down their net income by a small amount in order to drop down into the previous bracket.
Pay Childcare Pre-Tax
When an employer offers benefits that include a dependent care assistance plan, this is desirable because it is pre-tax money used for it. Should you decide to pay for your own child care, you are going to end up paying for the care service and taxes on the money you owe. This can save you a considerable amount of money in the long run.
Home Office Deductions
Whether you’re self-employed or work for someone else if you have a home office make sure to take the deductions on this. You can find out the percentage of square feet the room is of your entire house, or you can just take the simplified approach of $5 per square foot (up to 300 feet) and deduct this from your taxes.
Job Hunting Expenses
Installing alternative energy equipment can help you receive 30 per cent on the cost of tax deductions. This includes solar energy and geothermal heat pumps.
Donate to Charity
Take what you are not using, such as your old clothes, donate a vehicle you no longer drive or just donate cash and you can deduct this from your taxes.
Are you paying for school right now? The Interest on your school loans is all tax-deductible.