People often see taxes as cumbersome especially when there are piled up home bills waiting to eat up your next paycheck. However, being an employee, we are all subjected to pay due taxes to contribute to a better society and employers are no exception as well. Whether you’re having a tight budget, keeping a business afloat, or someone who’s hardly keeping up with daily expenses – there are several ways you can do to reduce your taxes. You might not see the benefits now but you will soon reap the fruits of your labor if you stick to these top five tax reduction tips.
Keep Track of Tax Deductions
You might be surprised as to how much you can get on your tax refund by the end of the year if you keep track of tax records. One simple way to do this is to keep the receipts of tax deduction claims. All you have to do is just put them in a labeled folder so it’ll be easy to get ahold of once you need them. You can even input them in your logbook and use a software which updates your tax account information. These are very easy and simple steps which can save you thousands of dollars per year!
Pay Your Home Loan
When you pay your mortgage off slowly, you’re not only reducing the mortgage amount and the years you need to pay but you’re also reducing taxes. Instead of squirreling away money in savings bonds which are taxed, pay off your mortgage and you’ll be happier with no taxes on home loan payments!
Register the Shared Savings Account to Low-Income Earner
Shared savings from a couple can earn some interest but are also taxed depending on the interest earned on that savings account. Register the savings account name to the lowest income earner so the least tax will also be imposed on that account. Also, keep track of your finances!
Redeem Charitable Donations on Your Tax Returns
We know that donating meager of hefty amounts to charitable donations are for a good cause. But in case you don’t know, these donations can be claimed on your tax return. All you have to do is keep all the receipts every time you donate, but also make sure it’s a registered charity or else, the receipts will be forfeited from being claimed on your tax return. It’s also important to note that the amount might not be given to you in cash value but is deducted from the taxable income instead.
Consult a Tax Accountant
Tax accountants have the knowledge on the updated tax rules and regulations and the expertise to evaluate several ways on how to reduce your tax depending on your lifestyle. The best tip is to find time to talk to a tax accountant so he can review your account as well as your refund. A tax accountant might even discover seemingly trivial errors that can be adjusted on your tax refund. Tax legislation is an arcane topic and it’s never a good idea to take these matters into your own hands. Getting advice from the right people will save you time and not to mention – money.