Do you want to save money on your taxes?
While we can’t get rid of tax completely, we all want to make sure we’re only paying what we have to. But most of us don’t know what our fair share is, or if we could be saving on our taxes.
Don’t worry, we’re here to help! Read on for these 5 tips on how to pay less in taxes.
- Lower Your Taxes by Feeding an IRA
The money you contribute into a traditional IRA counts as pre-tax. This means, it brings down the total income that’s taxable. This will bring down the amount you own in income tax.
In recent years, contributions you make until the deadline apply to the previous year. So, it’s a popular place to start when looking to soften your tax bills.
- File Under the Correct Status
What filing status you have plays a big part in determining your tax bill. It sets the rate and how much standard deduction you get.
Depending on your individual situation, you could have the option of picking a status. These statuses are:
- Single: Use this if you’re single, not married, divorced or separated by law
- Married Filing Joint: If you’re married you can file your taxes together
- Married Filing Separate: You can file separate returns, but savings this way are rare
- Head of Household: For unmarried taxpayers who pay more than half the home costs with a dependent.
If you can fit into more than one status, do your tax returns for both. Then compare which one brings the lowest tax bill.
- Keep All Donation Receipts
Any donations to organizations the IRS recognize are deductable. This means when it’s time to pay your taxes, your generosity can come with rewards.
Depending on how much you donate, the documented proof you need will vary. But make sure you keep every donation receipt and all evidence you can of the donations you make.
- Hire a Professional
This is a general tip, but especially vital if your tax returns are of a more complex nature. Having an expert on side could show you ways to save that you won’t spot yourself.
Even though a qualified tax professional (like an enrolled agent, or CPA) will charge more, it’s worth it. They have to follow an ethics code and must complete a set amount of education each year.
This means they’re the most up-to-date with changes to tax laws. In turn, this could mean more savings for you, or a bigger refund if you’ve ended up overpaying. Check out Merit Tax Group for more information.
- Look Up Local and State Tax Breaks
Local and state tax breaks can soon add up, so don’t overlook them. Federal taz reform laws removed misc deductions, but a lot of states still allow it. Or they’ll have lower thresholds to claim them.
Tax savings aren’t only for income tax either. Some places like New York City there is parking tax on some rented spaces. But if you request an exemption, you can cut that fee in half.
Wherever you live, make sure you check what local and state tax breaks are on offer. You could be missing out on savings you didn’t know were available to you.
How to Pay Less in Taxes Made Easy
So, there you have it! Now you know these 5 tips on how to pay less in taxes you’re well on your way to making savings.
The most important thing to remember about reducing your taxes is that you need to understand the tax system if you want to keep your bill low. Most people overpay because they are not aware of the savings they can make.
If you found this article helpful, check out our other blog posts today!
