4 Ingenious Ways to Save Money On Your Taxes Every Year
Of all the undesirable seasons of the year, tax season is the worst. Filing and paying taxes is the most tedious, expensive chore. But adulting requires it get done.
Each year millions of people pay more money in taxes than they should. Blame it on inexperience or call it lack of tax-savvy. Whatever the case, it does not have to be this way.
There are ways to save yourself a few extra dollars each tax season. Here are 4 ingenious tips on how to pay less taxes.
1. How to Pay Less Taxes: Earned Income Tax Credit.
When you file your tax return, claim the earned income tax credit. EITC is a tax benefit designed for working-class people with low to moderate income.
Every year thousands of people with children who earn less than $50K a year overlook this credit. Earned Income Tax Credit can save taxpayers as much as $6000 if claimed. Those filing must meet a few basic requirements:
- All parties listed on the EIC Schedule must have a valid social security number issued before the date of the return
- Must have income earned from an employer or your own business
- Legal citizenship
- Have a qualifying child or be between ages 25-65.
Check to see if you qualify for EITC and claim the benefit.
2. Take a Few College Courses
If you’ve been thinking of going back to school to finish up that degree, doing so could help you pay less tax.
The Lifetime Learning Credit is one of six education credits taxpayers can deduct on their taxes. Get tax credit for tuition, books, fees, and supplies from colleges and universities.
The LLC offers a $2000 maximum benefit.
3. Buy a House
Buying a house is the smartest investment any adult can make. Taking out a mortgage on a home comes with potential tax benefits.
A large number of homeowners don’t know that mortgage interest is tax deductible. So are property taxes. For people in a higher tax bracket who can’t pay off their mortgage right away, the tax benefit is better. For example, if you’re in the 35% tax bracket and your mortgage interest is $12K, you could save up to $4200.
So go ahead, buy that house.
4. Monetary Contributions
Give and it will come back to you–charitable donations that is. Monetary donations or funds given as charity are tax deductible. You can claim any contributions you give in the form of cash or property as a deduction. All you need to do itemize them on your tax return.
Qualifying Organizations:
- Religious organization – a church, a mosque, or synagogue
- A community trust fund
- Veteran’s organization or trust
- Civil Rights Defense funds
Save all your receipts, including pay stubs. Some companies allow employees to take part in charitable giving programs. These donations auto-deduct from your paycheck. Hold on to those so you can pay less tax during tax season.
A Final Word
These tips are not exhaustive but they do offer great insight into how to pay less taxes. Using them should make getting through tax season easier for you. You’ll also know how to maximize your deductions and avoid paying more taxes every year.
Read more of our articles for comprehensive ways to survive paying taxes.