How to Save Money on Taxes 3

How to Save Money on Taxes By Claiming Tax Deductions

Tax Season is around the corner and one of the top questions asked by many tax payers is how can I lower my tax bill?

Will, luckily, there are a few tricks and tips which you can apply to save money on taxes. You do this by claiming tax deductions. According to the IRS, “Deductions can reduce the amount of your income before you calculate the tax you owe. Credits can reduce the amount of tax you owe or increase your tax refund, and some credits may give you a refund even if you don’t owe any tax.”

How to Save Money on Taxes

When it comes to tax deductions, you got to know those that apply to your situation and there are many which you can benefit from. It is very beneficial and you can amass greater savings if you know how to pay zero taxes.

Here is a list of tax deductions – by category –  you can consider:

Business Credits and Deductions

There are literally dozens of deductions available to businesses. Here are some of the top business credits and deductions, which should also be considered by small businesses.

  • Cost of Goods Sold
  • Capital Expenses
  • Capital Versus Deductible Expenses
  • Personal Versus Business Expenses
    • For example: business use of your home and car.
  • Not-for-Profit Activities
    • E.g., Employees’ pay, which includes awards, bonuses, education expenses, fringe benefits, loans or advances, property, reimbursements for business expenses and sick and vacation pay
  • Rent Expense
  • Interest
  • Taxes
  • Amortization
  • Business Bad Debts
  • Other Expenses
    • For example, reimbursement of travel and non-entertainment related meals
    • Miscellaneous Expenses
      • Advertising expenses.
      • Anticipated liabilities.
      • Bribes and kickbacks.
      • Car and truck expenses.
      • Charitable contributions.
      • Club dues and membership fees.
      • Education expenses.
      • Franchise, trademark, trade name.
      • Internet-related expenses.
      • Political contributions.
      • Repairs.
      • Supplies and materials.
      • Utilities.
      • Telephone.

Visit the IRS website for an in-depth listing and explanation for how to apply for each tax deduction for your business.

Tax Credits for Individuals

As an individual, you can save money by claiming quite a few tax deductions. See the listing below.

Family and Dependent Credits

  • Child Tax Credit and Credit for Other Dependents
  • Recovery Rebate Credit
  • Earned Income Tax Credit
  • Adoption Credit
  • Credit for the Elderly or Disabled
  • Income and Savings Credits

Saver’s Credit (Retirement Savings Contributions Credit)

  • Foreign Tax Credit
  • Homeowner Credits

Residential Energy Efficient Property Credit

  • Plug-in Electric Drive Vehicle Credit at a Glance

Health Care Credits

  • Premium Tax Credit
  • Health Coverage Tax Credit

Education Credits

    • American Opportunity Credit and Lifetime Learning Credit

These credits allow you to get tax credits for pursuing education, having a retirement account and also a few for the elderly or disabled. The Earned Income tax credit is especially appealing if you earn minimum wage.

Tax Deductions for Individuals

As an individual, you can save money by claiming quite a few tax deductions. See the listing below.

  • Work Related Deductions
  • Itemized Deductions
  • Education Deductions
  • Health Care Deductions
  • Investment Related Deductions

These listings are by no means comprehensive. So feel free to explore and research more tax information and benefit from greater saving. The IRS website is a great resource; especially as they are the ones auditing your taxes.

*****

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