As we approach the first quarter of the year, we, the professionals and the entrepreneurs, are more concerned about the income taxes than any other thing in the world once we are through the festive season. During this time of the year, we generally fall back to the accounting services or the income tax consultants for their valuable tax advice. But one very common problem in falling back to them around this time of the year is that the end of the financial year looms large on our heads. Thus, many a times we find out that we are not in a position to save as much taxes as would have been possible had we gone for it earlier in the financial year.
Through this discourse we will try to find out effective ways out of saving taxes throughout the year so that we don’t face the similar sort of crisis for the years to come.
- Boost your retirement plan contribution: – This is considered as one of the most effective way to reduce your taxable income. You can contribute an amount up to $17500 if your age is less than 50 and in case your age is more you have the option to contribute up to $23000 to your 401 (k) or any other relevant plan. You can be rest assured that the money invested in your retirement plan is not taxable.
- Go for a health care flex plan: – Having a health care flex plan in place can save you a lot of money. It not only saves your income tax but also saves your social security tax. Apart from saving your valuable money these plans looks after you in case of a medical emergency as well. Thus, it is better to have a two way security like this in your pocket.
- Ask your company to compensate on your education: – You will be amazed to know that as per the current rules, your company can pay up to $5250 for educational assistance to you tax free every year. As such, if you avail this facility, you not only improve yourself from the academic point of view but also save yourself from paying extra taxes as the amount don’t show up as a part of your salary. Remember, this rule does apply for the graduation courses as well as courses not related to your current job also.
- Remember your expenses for moving to a new job: – If your new job is at least 50 miles away from your house, you can bill all your expenses of moving to the place along with all your belongings in order to join the job. Remember, this regulation is valid for your first job as well provided you are shifting to a place 50 miles apart from you house and the expenses will include the parking and the toll as well.
- Go for sustainable development: – If you are using alternative energy to enlighten your house and also to fulfil your daily needs you can save a big junk from your taxes. You can save up to 30% of whatever you install including solar electric systems, solar hot water heaters, geothermal heat pumps, wind turbines, etc. Your savings would include the labour costs and there are no caps imposed on the amount you save.
Thus, it is quite evident from this discussion that you can save a lot of taxes in some unorthodox manner as well. The only requirement is of knowledge for which you can easily take some tax advice from the income tax consultants both manually or online. Remember, the online accounting services are also mighty good these days.