Managing taxes is a task that every adult tries to avoid. Not everyone (including the accountants) is happy when that time of the year approaches when you need to file your taxes. When we talk about income tax, it varies according to which part of the world you live in, but there is one thing all have in common, and that’s learning how to manage and lower it. Managing income tax can save you from paying extra as penalty fees and in fact, will help you earn more. Need to know how?
Here is what you need to know.
Keep track of the important dates
First and foremost, you need to be prepared before the arrival of D-day. Make a note of the beginning of the period until the deadline for both the income tax and returns, and also the extensions. You can set reminders months before the important dates in order to be prepared.
Get a health insurance or an HSA
Getting an HSA (Health Savings Account) can help reduce your taxes. You invest in your healthcare indirectly, which is not reflected in your income tax. You earn money as passive income and when withdrawn, you need not pay tax because these are viewed as medical expenses.
Seek professional help
Chartered accountants are specialized in handling matters of taxes and a person’s income. If you are new to the arena of filing taxes and keeping records, you should seek help from professionals who could give you tax tips, like the accountants. Managing your own credits and deductions can get tricky at some point if you have just begun in the corporate world, and there are chances that you will make mistakes. This is the best move you can make because these professionals will not only point out the mistakes but will also suggest potential ways of earning extra income depending on your profile and credits.
Invest in real estate
Buying a house or a property can lead to dual benefits. Firstly, you invest in your own property, which over the years can fetch you more than three times the price invested, and secondly, it can reduce the amount of tax you need to pay. Buying and investing in real estate through a loan indicates reduction in taxes through property taxes and interest rates for filling in the installments.
Donating items and personal belongings can help in reducing taxes through the calculation of individual items donated. Make sure to keep a receipt of your donation in order to reduce the tax bill. In this manner, you can help in a noble cause, get rid of stuff, and ultimately lower the taxes you have to pay by a significant margin. Everybody wins.
These are just a few tips to manage and reduce your taxes, but other options can be considered, such as college savings fund, savings for your children’s future, starting a business, or simply keeping a proper record of your expenses. Managing taxes isn’t as complicated as you’d expect. You just need to educate yourself more in order to make the process run a lot smoother.