Ultimate Guide to Cut Your Taxes

Your taxes aren’t your favorite thing to do or think about, but what happens when someone tells you it’s possible you can save money on taxes in less than one minute? You’re suddenly a bit more inclined to want to look at your income taxes once again. Now is the time to carve out sixty seconds of your time to sit back and take a look at a few of the simplest tips for saving money on your income taxes.

Check Your Old Returns

One way you can help save some money is to take a look at your old returns before you begin working on your new ones. When you check back over the taxes you paid in years prior, you’re able to see where you saved money. It also helps if you can go back and check for missed deductions and credits to see if an amended return is something you should file.

By comparing your most recent returns, you can see what you’re missing, what you can change, and how you can save more money this year and in years past. It’s not fun to go over your old tax returns, but taking a moment to pull them up might be all the time you need to save serious money.

Change Your Income Strategy

If you are a business owner, you can avoid paying taxes by not taking an income. You might not find that a very appealing concept, you can also do yourself a few favors. Take a draw rather than an income. It’s minimal, but you can avoid paying taxes on this when you really want to focus on things such as your savings. You can also start by changing your investment strategy.

Pick investment concepts that are pre-tax investments so you spend less on taxes and more on your future. You can figure out how to do this yourself, or you can figure out how you might deal with an investment advisor to help you with your future.

Shelter Your Income

You may know what a tax shelter is, but you probably aren’t sure how this sounds even remotely legal. A tax shelter is a place where you put your money to shelter it from taxes. Roth IRAs, 401(k) accounts, and other concepts of this nature are great places to put your money because it’s not taxed when it goes into accounts such as this. You can save for your retirement, for the college education you want your kids to get, and so many more options if you want to protect your money and not focus on things like your taxes.

Deduct Wisely

You have choices when it comes to deductions, and you must make the correct choices. You can itemize deductions, and there are other ways you can get more money back rather than paying more. You just need to be careful you’re choosing the right options. For example, taking depreciation on your business vehicle versus taking mileage on it can mean two very different things.

Be sure you understand which one is better for you, and be sure you know how to handle them when you have the choice. One might be better for a year and worse for many years to follow, but one might be marginally good for many years, which totals more than you imagine from the start. Do the math, figure out which concept works better, and go with it.

Plan Ahead

It’s easier to get deductions and credits and save money on your taxes when you plan all year. Don’t wait until the last minute to get your tax information together when there are many ways you can get this handled throughout the year. Keep a good record of your expenses, your income, and everything else you need so you’re capable of spending more money on you and less money on your taxes.

It’s also helpful to prepare your taxes on time so you’re not penalized for paying late. It’s a small way to save money on your taxes, but it’s savings. Every little bit helps when you do the math and figure out how many years of your life you’re paying taxes.

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