Everybody wants to know how to save money on their taxes through either deductions or tax credits, anything to lower the amount you may have to pay or to increase the size of your refund. There are many popular deductions and credits that a lot of people just don’t know about or utilize like real estate taxes, student loan interest deductions or mortgage interest deductions.
One tax credit you should check to see if you qualify for is the earned income tax credit. This is credit has different qualifications, one of them being that you must make less than fifty thousand dollars a year. This is a credit that a lot of people do not realize that they may qualify for. A sometimes under-utilized way to save on your taxes is to start a business. If you have your own business you have more control with how you pay taxes. Many business owners decide to keep funds in their businesses or business accounts firm so they don’t have to draw it out as taxable income. If you are running a business, you can also right off certain expenditures as expenses that can help you reduce your tax burden.
For those that have children, you should look into many of the tax benefits available to you. The child tax credit can be up to a thousand dollars for each child under the age of seventeen. It’s important to note that this tax credit it not available for high-earners. For those that pay alimony, those payments are tax deductible as well. As a parent, creating a 529 college savings accounts for your child or children allows you to not only save your child’s future, but also allows you to not have to pay taxes on that money either.
Another thing that is rarely discussed that can help lower your tax burden is keeping your mortgage for as long as you can, in lieu of paying it off early because interest payments for mortgages are tax deductible. Though many people find that they prefer just to be rid of the additional debt than to wait and reap this benefit as much as possible. If you save for retirement through either a 401k or IRA, the money you put into these accounts is tax deductible, though there are certain limitations to this. If you contribute to charity, that money is tax deductible as well.