It’s tax season once again. When it comes to tax preparation, many of us either do it ourselves or we have a particular “tax guy” that we trust to do it for us. Is he getting you the most out of your tax money? Is he helping you save more money each year?
These are very important questions that you need to ask.
You are about to learn some important steps that you can take to reduce your taxes for 2013.
Take Advantage of Tax Credits:
Getting a tax credit is the next best thing to paying no taxes at all. A tax credit will reduce the amount you owe. New tax credits are added every year. You need to know about them so you can take full advantage of them. A tax credit can be from anything; a hybrid car, making energy improvements to your home, even your child’s education can be a tax credit. Ask a tax expert what they are and if you are able to use any of them.
Maximize Your Tax Deductions:
It’s easy, the more tax deductions you have, the less tax you’ll pay. You can deduct almost anything when you do your tax preparation. Keeping yearly records is the key to tax deductions. When you do your monthly budgeting, save all of your necessary receipts and divide them into what is deductible and what is not. Then when the time comes to prepare your taxes, you will be ready for any deductions you are entitled to and you will have the paperwork to back them up. A tax deduction can include business expenses, charitable donations, property taxes, mortgage interest or other business and personal expenses.
Reduce Your Tax Rate:
Federal income tax rates can vary greatly. To benefit from the lowest rates possible, make sure to list all income from long-term investments such as stocks, bonds and real estate.
Transfer Income to Others:
Don’t want to end up in a high tax bracket? There is something you can do about it. People do it all the time to save money. Transfer a portion of your income on paper to someone else that is of lower tax bracket. This process is called income splitting and is usually done with your spouse or children.
Take Advantage of Your Filing Status and Tax Exemptions:
Your filing status can have a major effect on the amount of taxes you pay. It can even decide which tax bracket you are in. It also plays a role in deciding your standard deduction, personal exemptions and itemized deductions. Your filing status is important and should be reviewed with a tax professional during tax preparation.
With careful planning, you can owe less money this year and every year after.