How to Lower Your Taxes
While paying taxes is extremely important to keep the economy healthy and continue to receive great services from the government such as roads, hospitals, schools, parks etc, it still does not make it any less of a burden.
Fortunately, there are some legal ways for you to cut down the amount of taxes that you owe to the government.
Instructions
-
1
Keep in mind that all contributions made to charity, irrespective of whether they were made in cash, goods or services, are deductible. Rather than waiting for the month of the year to decide which organisation to support, you should make the decision well in time. Do not forget to count any transportation expenses that you may have incurred to do charitable work or any expenses incurred in preparing something for a non-profit organisation while tallying up your charitable contributions.
-
2
Thanks to the Energy Policy Act 2005, going green will help you save some green in your taxes. If you have made any investment in making solar power and other energy efficient improvements in your home, this investment will be deductible from your income tax.
-
3
Make sure you keep track of all your medical expenses. Incurring big medal expenses can result in lower tax bill, but only if you itemise your deductions. Medical expenses exceeding 7.5 percent of your adjusted gross income can be written off. There is where keeping the receipts of any prescription drugs or visits to doctor can come in real handy.
-
4
Any money contribute to an employer-sponsored retirement fund lowers the amount of tax you owe the government. The employer deducts the contribution from your gross income while calculating your income tax.
-
5
If you had taken a student loan to complete your education and are still in the process of repaying the loan along with the interest, keep in mind that interest on student loan is deductible.
-
6
If you graduated from the college in the current year and the first job you got required you to relocate to a new place, keep the receipt of the transportation expenses with you as these are deductible.
