It is tax season! For some, this is a great time of year to get extra cash to do things. With this extra cash, you can pay off some debt or place a down payment on that car you have been waiting for months to purchase. For others, this is a disappointing time of year that causes them to pay out of pocket to have taxes filed and sometimes even face the possibility of owing the government some of your hard earned tax money. Typically, there are individuals searching for secrets to reducing taxes and luckily you have arrived to the right place. Continue reading for legal secrets to reducing your taxes.
What the IRS Provides
When it comes to revealing any secrets to reducing your taxes, the Internal Revenue Service is a good source to provide you with the many secrets to reducing your taxes. This method of finding out secrets to reducing your taxes is good because if the IRS is suggesting it, then it is obviously legal and you do not have to worry about being penalized for using any suggestion made by them. With that being said, the IRS offers a ton of resources that can help you understand different tax credits that you can receive and ways to decrease your taxes.
Consider this situation…
You are in the process of filing your taxes and your tax preparer has informed you that you may be owing money to the government. In fact, you owe $2,000 in taxes. The good news is that you could qualify for one of the tax credits that will give you $200. Now, instead of owing $2,000 in taxes, you will only owe $1,800. So, the first of many secrets to reducing your taxes is to read up on the tax credits that you may qualify for and inquire about them when you go to file your taxes.
More Secrets to Reducing Your Taxes
Here are more secrets to reducing your taxes that you can use to make filing your taxes a bit easier for you and your bank account.
- Contributing to a retirement account will give you the opportunity to take away the amount paid to the account from your taxable income. In addition, your retirement money can grow and not be threatened by any taxes.
- Contributing to a health savings account is beneficial for individuals with high deductible medical plans. Any medical funds that have not been used can roll over and not be taxed.
- You can combine your vacation with a business trip. This will decrease your vacation cost by subtracting the percentage of any unreimbursed expense that you had for business from the entire cost of the trip.
- For individuals with home businesses or any business that is self-owned, you can deduct home office supplies expenses and even home utilities used in the room of your home where business is conducted.
- Self-employed tax filers can qualify for a number of deductions including advertising, travel mileage and gas usage, supplies, internet and phone usage, mailing fees, and any other fee that is used for the prosperity of the business.
- The American Opportunity Tax Credit is available for all college students. You can receive a 100 percent tax credit on all college expenses up to $2000 and 25 percent on the following $2000. There is a maximum of $2500 deduction for each qualified college student.
- The Lifetime Learning Credit is for any adult who decided to return to school for a college degree. This gives you a $2000 tax credit per year.
- The Earned Income Tax Credit is available for any low-income earning individual who is over the age of 25.
- If you give to a charity on a regular basis, you can qualify for a charitable deduction. This includes donations of clothing, furniture, money, cars, and anything of value. Have your receipts handy if you are planning to inquire about this particular deduction.
- Student loans can benefit you for a tax deduction as well. If you or your parents are paying on any student loans, you will qualify for a deduction.
- Having a hard time finding a job? You may be able to slide in your job hunting expenses in the miscellaneous expense section of your taxes. This could qualify for a tax deduction.
- For military persons in the reserves, you can receive a tax credit if you are required to travel over 100 miles from your home and have to stay overnight for a period of time. Any funding spent on hotels, gas, or food can be counted toward a tax deduction.
Filing your taxes does not have to a disappointing experience if you use one or more of the many secrets to reducing your taxes.