| Every tax payer is constantly seeking ways and | | | | so on. Refer to the list provided by the IRS on Form |
| means to pay lower taxes. According to financial | | | | 1040: page 1. |
| wizards those who actually pay lower taxes for large | | | | 2. Escalate your tax deductions. Taxable income is |
| incomes earned are wise and great decision makers. | | | | the money left over after reduction of AGI and |
| Statistics show that most people pay higher taxes | | | | exemptions. If you itemize your deductions instead |
| because:o They are not up-to-date with tax laws.o | | | | of just taking a standard deduction you will benefit. |
| Are sloppy with their accounting methods. | | | | According to tax advisors you must use which ever |
| If you are serious about saving on taxes you need | | | | is a higher, itemized deduction or standard. Ensure |
| to know, what the common tax mistakes people | | | | that you take into account mortgage interest, home |
| make are and ensure that you avoid them. What you | | | | equity loan interest, state taxes, membership fees, |
| can do is:o Surf the internet and read through all the | | | | and charitable donations. |
| articles and tips on taxes published by taxation | | | | 3. Use tax credits to reduce taxes. Tax credits are |
| experts and the IRS. Ensure that you read the 1040 | | | | retirement funds, college expenses, adoption of |
| instruction booklet.o Once in a while hire a | | | | children, and so on. Education related credits are of |
| professional to check through your tax returns and | | | | two main kinds: The Hope Credit for the first two |
| advice you on your tax planning. | | | | years of college and the Lifetime Learning Credit for |
| The easiest and most honest way to save on taxes | | | | anyone taking college classes. |
| is to plan your taxes and devise a fool proof method | | | | 4. Avoid paying additional taxes by resisting early |
| of keeping track of receipts, investments, property, | | | | withdrawal of funds from the IRA or 401 K |
| business expenses, charitable donations, medical | | | | retirement plans. Withdrawal results in an increase of |
| expenses, and so on. By being organized you will not | | | | taxable income. |
| miss any aspect that will allow a tax waiver. | | | | 5. Find out if you are eligible for Earned Income |
| According to tax gurus there are 3 ways in which | | | | Credit. |
| you can pay lower taxes: | | | | 6. Get a larger refund on taxes by increasing the |
| 1. Create a solid retirement plan. Since taxes depend | | | | withholding. Log on to the IRS website and learn |
| on your AGI or adjusted gross income and is a | | | | about the W-4. |
| measure of your finances, you must reduce your | | | | Taxes are not about blindly filling forms it is basically |
| AGI. The easiest way to do this is to contribute to a | | | | intelligent planning and using strategies that will benefit |
| 401K or similar retirement plans. Money saved in a | | | | you in the long run. So think investments, buying |
| retirement plan is deducted from income and so | | | | property, and so on. The World Wide Web has |
| lowers the AGI and taxes. Another way of reducing | | | | incredible amounts of information and tips that will |
| AGI is to make adjustments by including payments | | | | help you pay lower taxes. |
| to IRA, student loan interest, alimony payments and | | | | |