subject: Save money on income taxes by reducing them [print this page] Save money on income taxes by reducing them
We are always on lookout for ways to some how reduce our tax bills.
We are discussing a few ideas on ways to lower your income taxes in the current year and for several more years to come. It is very important for all the families to have a look at these simple tips and examine the ones which can assist you in reducing your taxes.
Fund your retirement: Everybody saves for retirement but are you aware that saving for retirement is in itself as good tip to lower your income tax? By doing saving for your retirement years, you are lowering your adjusted gross income equivalent to the amount of money you save, thus reducing your tax liability.
Plan to sell those stocks which don't perform well: You should have a re-look at your portfolio and must finalize as to which stocks are worth much less than you initially bought them for and then hive them off. Losses you incur on the stocks are eligible for tax deductions. If you are selling them for prices higher than you initially paid, then you are liable to pay the capital gain tax.
Try to get a mortgage:
If you not an owner of house, you're then missing a good tax saving opportunity. The interest paid by you on your mortgage is deductible from tax, and for the first few years, a major part of your loan payment goes towards the interest, so you can really save a lot.
Secure a second mortgage! -
You can secure and then use your home equity loan to repay your credit card loan or car loan, etc. Similar to your first mortgage, any interest which you pay for your second home equity loan is fully tax deductible but you usual loan on car loan or credit card is not.
Deduct Your Child's Tuition
If currently you pay the college tuition of your child, then it can be deducted from the taxes you pay. If you are not having any child studying in the college, think about taking some classes yourself, as the tuition you pay is also deductible!
Make your home more energy efficient
When you buy a new appliance for your residence, like water heater, always go for the appliances which have the government's energy ratings to qualify for tax deductions under tax laws.
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