We are all stressed out especially during tax season. We tend to wait on the last minute unless we believe we will get a refund. Suppose you are not one of the lucky ones getting a refund then, how do you protect your earnings from the IRS?
Here are a list of ways that you can reduce your tax bill
- You might want to consider contributing to your IRA. The IRS will give you a deduction if you contribute to your retirement fund. So take advantage of this to reduce your federal income tax bill.
- Open a health savings account. The IRS will give you a deduction on your contributions if you have a high deductible medical plan.
- Give to charity. Yes, the IRS will also give you a deduction if you give money away. Make sure you keep your receipt.
- Your home can give an income tax deduction.
- Also you can claim dependent children.
- You can deduct business expenses if you have a side gig. Also deduct travel & phone expenses. Make sure you keep accurate records.
- Capital gains from stocks can help you with your income taxes. When calculating the cost of a stock that was sold take into account your reinvested dividends. This will reduce the capital gains.
- You can also donate stocks to avoid capital gains.
- Take advantage of dependent and child care credit. You may want to consult a tax professional.
- Review your paycheck withholdings
Be alert and stay on your toes. Look for ways to save money on your income taxes. Do everything possible to keep as much of your income as possible. Pay your taxes but remember, if you get a refund put at least half of it away.