How to Reduce Your Taxes

The year 2011 is the year of opportunities and chances that will pave the way for you to learn from the mistakes you did before when it comes to managing your finances. By having proper financial management, you can ascertain that financial stability will always favour your situation.

If you would like to know more tips on how to successfully reduce your taxes, this article can help you.

If you would like to be more serious when it comes to saving money for the future of your family, you need to keep track of your expenses. If you plan to spend the money, make sure that it will go for a very important one because you will be the loser in the end if you will just let your money float in the air. Who knows? You might just wake up one day that all your savings are already lost.

Learn How to Reduce Your Taxes

In order for you to know the latest tax policies of IRS today, the best thing you can do is reading publications in the IRS more particularly the 1040 instruction booklet and tax laws articles.

You can also ask for help from an expert in preparing your tax return especially if you are not yet that familiar with tax filing. To make sure that everything is organized, the casualties, medical bills, donations, mileage, employee expenses, property, investment documents and receipts must also be kept.

Another tip in reducing the tax is by boosting your contributions in the 401(k) because any amount you contribute here will make your taxable income lower. So, the best way to start the year right is by simply do all you can to have a good record here.

You can also have lots of hope through the flexible spending account because contributions made here can help you escape social security tax and income tax as well. This means that you can save up to 35% compared to spending an after-tax money. There is also a specified date of using your FSA money so make sure that you will spend it in your account just before the deadline ends. The maximum contribution will have a limitation that usually differs by employer.

You also have to invest your money in properties such as house, rental property and retirement account. The best thing to do if you are not currently covered by other retirement account is to put up 2,000USD annually into your traditional IRA. Now, what if your spouse is no longer working? You also need to put up the 2,000USD in an annual basis into the spousal IRA.

Planning ahead is also a very important one because this will help you in meeting the deadline of payments. By estimating the eye, dental and medical care costs you will be able to organize all the payments.


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