Finance
5 Legal Ways to Pay Less Taxes
It’s that time of the year that many of us dread—paying taxes. If you’ve ever wondered about ways to pay less taxes, you’re not alone.
You might be surprised to learn that there are plenty of ways to pay less tax, without breaking the law. If you’re a savvy taxpayer, you know just how to save and use the tax system to your advantage.
Ready to learn more? If so, keep reading to find five ways to pay less taxes—all completely legal!
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Keep Your Donation Receipts
If you’re looking for new ways to pay less income taxes, hold onto your donation receipts! Generally, donations to registered charities are tax-deductible, so if you frequently make donations, this is an easy way to save.
Read Also: Lifetime Capital Gains Exemption & Qualified Small Business Corporation
Even small donations add up over time, so it’s worth keeping a record of donations you’ve made. Or, scan your receipts online, so you can keep a digital record, in case of an IRS audit.
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Add Funds to Your Retirement Plan
Another great way to lower your overall income tax is to transfer some of your income to your retirement plan, like your 401K.
Pre-tax contributions to your retirement plan lower what’s known as your adjusted gross income, or AGI. As your AGI lowers, so does the amount of tax owed.
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Go Back to School
Are you thinking about going back to school or taking some professional development courses to improve your career prospects?
If so, great news—most educational expenses qualify for tax breaks like the Lifetime Learning Credit.
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Claim All Eligible Deductions
It’s likely that you’re eligible for more deductions than you might realize. Depending on your industry and eligibility, there are plenty of tax deductions that you can use to help lower the amount of tax you owe.
Read Also: How a U.S. Resident Can Receive Tax-Free Alimony From a Canadian
Some of the most common tax deductions and credits include student loan interest, childcare, medical expenses, and residential energy.
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Work With an Accountant
One more amazing way to save on your taxes is by working with an accountant. Taxes can be incredibly complex, so it’s possible that you’ve made some filing errors that could lead you to pay more than you need to.
When you work with accountants like WealthAbility tax services, they’ll ensure you have claimed all possible deductions and ways to save. If you’re self-employed, they can also suggest whether forming an LLC or company would be better for you financially.
Use These Tips to Pay Less Taxes and Save Money
Ready to pay less taxes? After a tough year, it’s something we can all appreciate.
To get started, use the tips above when working through your tax. With advance preparation and organization, you can stay one step ahead of the IRS—legally!
Use the money you saved on tax to put towards your savings, take an amazing trip, or put towards your mortgage.
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