Planning For Taxes, Be Prepared For Tax Time
Despite its association with death, taxes aren't always that bad.
A few of us even get quite a bit of money back come tax season.
And at the very least there are ways to curb the eventual April blow by planning ahead.
Oftentimes, the ways in which people can offset taxes are financially beneficial as well.
As cumbersome as tax planning is, there are a few basic ways you can learn to save before you're pouring over old receipts at the 11th hour...
Taking a Bite Out of Tax 1.
Reduce Your Adjusted Gross Income (AGI) - The American Dream is often emulates thoughts of endless prosperity and capital gain.
In reality though, at least the taxable reality we know, the more one makes, the more the government taketh away.
There are ways however, to climb the economic ladder and stowe away hard earned cash rather than throw it away.
what are some ways you can accomplish this? Very simple - a good portion of your income could be invested into retirement plan (a 401(K) would be a good choice).
Other deductions that will reduce your AGI include money paid towards education and an IRA fund.
It is important to remember that all deductible contributions are itemized on the Form 1040, and starting now will save a ton of time come April.
2.
Maximize Tax Deductions - Deductible items such as interest paid on mortgage payments, charity contributions, medical expenses, dependents, education, marriage, can all take an edge off your taxable income.
You can also deduct state sales tax when a state income tax deduction is not available or amounts to less of the two.
All investment related expenses would also be tax deducible as well as all state taxes.
3.
Use tax credits to your advantage - what are tax credits? Tax credits are an excellent way to reduce taxes.
Things such as adopting children, paying for college education, investing in retirements plans come with tax credits that can be used to reduce the taxes to be paid.
Some examples of tax credit items are the EIC (Earned Income Credit), retirements plans, IRA, education at college and above level, etc.
4.
Use a tax planner - it is advisable to use a tax planner every 2-3 years so one would learn from the returns filed how tax returns are correctly calculated.
A tax planner would also be the source of invaluable advice regarding what type of investment needs to be done when so as to keep the taxes due at the minimum possible, while still living on the good side of the law.
5.
Research, research, research - continuous updating and research is needed on taxation so as to learn (among the first) what the new rules about taxes are; what are the best ways to profit from exemptions, and so on.
Use the Internet to accumulate all the pertaining information that would be helpful when working out the exact amount you owe the Government.
Besides the Internet, there are other places as well - tax software programs which do all the calculations for your automatically, the local library where tax and tax returns would have hundreds of chronicles, seminars/ workshops, freelancing agents.
Follow any of the above or a combination about two or more to get the best out of the tax planning and payment.
A few of us even get quite a bit of money back come tax season.
And at the very least there are ways to curb the eventual April blow by planning ahead.
Oftentimes, the ways in which people can offset taxes are financially beneficial as well.
As cumbersome as tax planning is, there are a few basic ways you can learn to save before you're pouring over old receipts at the 11th hour...
Taking a Bite Out of Tax 1.
Reduce Your Adjusted Gross Income (AGI) - The American Dream is often emulates thoughts of endless prosperity and capital gain.
In reality though, at least the taxable reality we know, the more one makes, the more the government taketh away.
There are ways however, to climb the economic ladder and stowe away hard earned cash rather than throw it away.
what are some ways you can accomplish this? Very simple - a good portion of your income could be invested into retirement plan (a 401(K) would be a good choice).
Other deductions that will reduce your AGI include money paid towards education and an IRA fund.
It is important to remember that all deductible contributions are itemized on the Form 1040, and starting now will save a ton of time come April.
2.
Maximize Tax Deductions - Deductible items such as interest paid on mortgage payments, charity contributions, medical expenses, dependents, education, marriage, can all take an edge off your taxable income.
You can also deduct state sales tax when a state income tax deduction is not available or amounts to less of the two.
All investment related expenses would also be tax deducible as well as all state taxes.
3.
Use tax credits to your advantage - what are tax credits? Tax credits are an excellent way to reduce taxes.
Things such as adopting children, paying for college education, investing in retirements plans come with tax credits that can be used to reduce the taxes to be paid.
Some examples of tax credit items are the EIC (Earned Income Credit), retirements plans, IRA, education at college and above level, etc.
4.
Use a tax planner - it is advisable to use a tax planner every 2-3 years so one would learn from the returns filed how tax returns are correctly calculated.
A tax planner would also be the source of invaluable advice regarding what type of investment needs to be done when so as to keep the taxes due at the minimum possible, while still living on the good side of the law.
5.
Research, research, research - continuous updating and research is needed on taxation so as to learn (among the first) what the new rules about taxes are; what are the best ways to profit from exemptions, and so on.
Use the Internet to accumulate all the pertaining information that would be helpful when working out the exact amount you owe the Government.
Besides the Internet, there are other places as well - tax software programs which do all the calculations for your automatically, the local library where tax and tax returns would have hundreds of chronicles, seminars/ workshops, freelancing agents.
Follow any of the above or a combination about two or more to get the best out of the tax planning and payment.
Source...