How To Minimize Your Taxes For The Next Year
Author: Gen Wright
Taxes are everyone's Big Annual Headache. It's a little easier for salaried people, a little tougher for people with fluctuating incomes, but all in all it's one right mess. In the end, however, people always end up feeling a bit better when the tax return reaches their bank account. What are the ways you have to minimize expenses to Uncle Sam for the next financial year?? Invest in a retirement plan. Investing in a retirement plan has twofold benefits. First of all, you have something set by for when you are old and/or in desperate need. Secondly, the money invested in a 401k is deducted from your gross taxable income. This means that the taxes you pay are lower. ? Keep tabs of processing fees. Bank processing fees, PayPal fees and such expenses are tax-deductible. Keeping track of them will reduce your taxable income even further. ? Invest in medical insurance. Medical insurance is fully tax-deductible for individuals, and may be partly deductible if you are part of a group plan. ? Buy a home. Yes, the recession is nearly over. Still, land and real estate prices have not yet reached the highs of 2007 and before. To top it off, the sum you spend on your housing loan is tax deductible. Enough reason to buy that home you've been putting off? Thought so!? Contribute to charity. Donations to charity will also decrease your taxable income, provided that the institutions are part of the list of eligible institutions. ? Indulge in a hobby. Hobby expenses are tax deductible, up to the amount of money you gain from that hobby. For example, if you invest $100 in plants, and then sell seedlings for $150, you are still eligible for a $100 tax deduction.? Spend a holiday in Vegas. The amount of money you lose in gambling, less than or equal to your winnings, will be tax deductible. As with the "hobby expenses" rule, if you lose $100 and win $150, you get a $100 tax deduction. One word of warning, though: this is probably going to cost you more than it'll save in taxes.? Sell off your badly performing assets. Capital losses can be claimed as a tax deduction. So if you have had a lot of capital gains this financial year, you will have some losses to offset them. ? File jointly. A married couple filing jointly is liable to much lower taxes than married couples filing separately or individuals. ? Know the deductions you are eligible for. Very often, people end up paying much more than they need to, just because they do not know the deductions for which they are eligible. Reading up the latest tax rules and amendments will help you identify areas in which you can claim deductions, so you can save the receipts and invoices required to make the claim. Otherwise, you can hire a good CPA - whose fees will also be tax deductible - and get them to file your taxes. Taxes accumulate all year round, though they get paid only once a year. Rather than getting caught in a quagmire when the time rolls around, stay aware and start preparing right now. About the Author:
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