Tax Tips: Save Tax
Tax saving tips
Tax Saving Tips
(i) Make prepayments on your 1 January mortgage payment - Make a check for the payment due 1 January before the previous 31 December. This would make you eligible for tax deduction on that payment in the next year. Even if you have postdated the check, the tax deduction stands.
(ii) Last-minute expenses and donations - Make some donations before the 31st of December. Then you could avail of the tax benefits that go along with these charitable expenses. Be sure to use your credit card to make these donations.
(iii) Defer your income - Stall your December incomes until January. You can request for deferment of the Christmas bonus to the New Year. This tip can be used also if you are self-employed. Just make your December bills in the month of January. With investments, some companies would allow to postpone paying taxes until a later year even if the income is earned this year.
(iv) Scrounge for all tax deductions - Look out for all heads where tax deductions apply. There are several places where a taxpayer can get deductions; so many in fact that some of them can be missed. Even a couple of more deductions could bring about measurable tax deductions.
(v) Make charitable donations - Whatever you do not use, donate it to charities. Clean out all the old stuff cluttering your home and donate it to a charity that you know about. Get receipts for your records. Deductions can be claimed on this amount equal to the wholesale market price of the items given. Thus cleaning up your attic or garage could be in fact a rewarding experience in more ways than one.
(vi) Put your kids on the payroll - You can pay your kids for small chores around the house provided they are above fourteen years of age. This would transfer some of your high taxable income to your kid's low taxable income. However do not pay them too much, or it could be a deterrent in their getting financial aid when they are ready to go to college.
(vii) Make investments in your kids' names - All investments made for the future of your kids are tax deductible. You can get a deduction of up to $700 in investment income per kid, provided that they are above fourteen years of age.
Keep these elementary tips in mind and they could go a long way in making you actually whistle and sing while paying taxes. Make advance preparations and save hugely on your tax payments.