Many people ask "How can I reduce my tax liability?". It is simple. Just like anything else planning is essential to success. A well planned year could save you hundreds or even thousands of dollars when it comes time for income taxes. The single best thing you could do for yourself is buy a house. I can't stress the importance of owning a home. The interest on the mortgage is tax deductible, you build equity in the home, your housing expense is fixed for 30 years, the list could go on and on about how owning out weighs renting. Right now could not be a better time to go out and buy. With sub prime rates, FHA and other government housing, it would be foolish for anyone not to TRY to qualify for a mortgage. Mortgage interest and now MI premiums are tax deductible which often are the first things that make a person itemize.
If you know you are going to itemize your deductions you better be saving all your receipts! Sales tax can quickly overcome state and local tax payments. If you own your own business or simply sell crafts saving receipts on materials bought could help reduce your taxable income.
The next deduction that comes to mind is contributing to an IRA. The IRS is allowing you to deduct payments into an IRA. This is a no brainer. The number one thing people lack the most is retirement funds. Whether your 30 or 20 there is no better time to start and IRA fund. Time flies by as we already know! You never want to face retirement on social security alone.
Hopefully this has been helpful. I wish you all good luck in life and hope you are successful. May this article save you thousands on your income tax next year or even this year.
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2 comments:
Its good to read that you think about the income tax planning, I am very much impressed by the fact. Keep it up!
Good post. This information will surely help me in reducing my tax liabilities.
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