June 21, 2013

Ways of saving some money on Tax

In life there are inevitable things and practices. Tax is an element of society that has some historical significance and will be around as long as mankind is. Paying of taxes and filing of the same has never been an interesting practice for many and as such, most people have had the habit of rushing through when calculating and remitting their taxes. Well, in as much as the process may seem undesirable, payment of taxes if given the due diligence it deserves, it can make you save an extra coin. In the United States for instance, research revealed that less than 21% of American workers who earned $50,000 and less were unaware of the Saver’s Credit yet they were the key beneficiaries. There are a number of ways in which you can save money on your taxes should you become extra careful while filing your returns.

Capitalizing on charitable donations

Donations are tax deductible. This means that whenever you give towards those in need, you are not only helping the less fortunate and destitute but you are also saving yourself some pennies as well. Be sure to get a receipt for every donation you give above $250. Donations can range from electronics, furniture, books to old toys. Always have the habit of preparing a list of all that you donate throughout the year. To be on the safe side, it is vital that the organization and the items you are donating are listed on the revenue authority website.

Reconfigure your withholdings

Tax refunds are usually given at the year end and to most people these look like windfalls and extra benefits. However what people do not understand is that the same money they gave is the same that is coming back to them. Instead of allowing the government to hold your tax refund money until the end of the year, there is an alternative way where you adjust your withholding on a tax form so that you can receive the money throughout the year as opposed to year end.

Establish a retirement nest egg

Saving for retirement is commendable as it takes away pat of the worries of tomorrow. The other good news is that retirement contributions are tax deductible. This means that should you increase your contributions, you will in essence be lowering the impact tax. The difference between what you should have been taxed and what you are actually taxed can constitute a huge saving.

Going green

The usage of green energy is associated with tax credits. The installation of alternative energy equipment such solar electric systems, can qualify for a tax credit which is usually 30% of what you have paid. Electric automobiles are some of those items that attract huge tax credits.

Maintain accuracy of your records

Record keeping is a very vital component of tax compilation and return. Accurate records kept throughout the year of such items such as receipts, job search expenses and charitable donations. With proper records, the itemizing of expenses and their tracking becomes relatively easier. To those who pay the standard deductions, they may experience a variance while using itemized deductions. If the total deductions sum up to a figure higher than the standard, then you will receive a relatively bigger tax return.

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