How to lower your taxes – ways to cut down?

Last Revised on December 16, 2009

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As much as we all know how taxes help fund all the public places and properties such as libraries and nice streets we all enjoy, people hate paying taxes. The are all looking for ways to lower their taxes when they file the forms at the end of the year. Mainly because they think it does them no good, not at the individual specific level. Tax is something that everybody has to pay as long as you make money, have income of some sort. There are also taxes on items you purchase, and the things you sell and the profits you earn. Thee is no escape; IRS can catch the tax-nay-sayer eventually. Is there any way to cut down on them when you file the income tax and pay the least amount you can possible owe? We believe so and we will list the things you can do to lower the taxes, so you can keep more at the end.

How do I Pay Less Taxes?

There are numerous things you can do to pay less taxes to the government in anywhere they charge you one. First of all, contribute to you 401k seriously. Most employers in the United States provide the option for workers to contribute some amount of their earnings to 401k. These contributes help lower your taxable income amount drastically. You can add more than $16,000 that you can get back anytime, although you are specifically saving that money for the retirement. Some employers also provide their employees to open a FSA, flexible spending account, with them. This money is not taxable, not even a social security tax.

It maybe due to the recent surge of economic recession, but the government has rolled out so many tax credit for consumers who will buy a house or cars. There is a $8000 tax credit for new homebuyers. That’s a huge amount, considering how hard it is borrow money from banks these days. There are tax breaks for cars as well. If you buy a new car between February 17 and December 31, 2009, then you can deduct state and local sales taxes and excise taxes paid on up to $49,500 of the cost of the car.

You can also try itemizing your tax deduction if you have a huge medical bill this fiscal year, although some reports suggest that the medical bill has to be around 7% of your total adjusted income to make an impact on your tax filing.

And if your income is pretty high and can’t seem to find a good satisfactory way to lowering down your taxes, hire a tax accountant for few hundred bucks. They will be able to help you be eligible to pay as little tax as possible. You can also try tax free bonds and money market funds.

The best tip is to using tax filing software; it is very easy to use. All you do is punch in your number; it not only prevents you from the headache of calculating the numbers but also can save as well as earn you big money.

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2 Responses to “How to lower your taxes – ways to cut down?”

  1. TaxSlayer Says:
    December 16th, 2009 at 9:41 am

    There are so many things people can do to lower the taxes big time. Often times when they file it using old paper system, they miss important deductions such as health insurance premiums, educator expenses, student higher education expenses, energy saving home credit, casualty or natural catastrophe deduction and loss of investment stock values. I am sure I missed a bunch of them, but remember IRS is your friend not enemy. You can always contact them if you don’t understand any part of the tax filing route.

  2. Last minute tax breaks to take by Nathan Says:
    December 26th, 2009 at 2:09 pm

    Tax season may seem far off for some people, but there are only few days left to lower your 2009 tax bill. We already had out Christmas, now it is time to think about making up for the money spend during holidays. There are several tips that could help anybody who is interested in cutting down taxes, that could possibly result in thousands in savings for you. Some experts suggests that you should take as many deductions as possible through itemizing the tax return if you think your income next year will be much lower and fall in low tax bracket and defer any income into next year.

    Also probably a lot of people who bought hybrid cars like Toyota Prius might still qualify for a credit upto $3,500.

    Oh yeah, don’t forget the money that you gave in gift or charities can give you huge tax breaks. A lot of people lost jobs in year 2008 and 2009; people who gave their family member who lost his or her job can give any number of people up to $13,000 each in 2009 without gift tax consequences. Similarly, if you give money to charities over $250, you will get a receipt for that donation and can use it for a small tax deduction.

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