Income Tax Savings Tips
Finding tax savings and reducing your taxes can be a time-consuming task since existing tax laws change frequently while new tax laws are constantly introduced. Keep up-to-date on the latest methods of tax reduction and the most effective tax planning tips.
Income Tax Reduction
If you received a tax refund check this year or are expecting a refund next year, consider this question: When is the last time you adjusted your paycheck income tax withholding?
Make sure you are having enough taxes withheld, but not too much! You might even want to reduce your paycheck withholding. Find out how to reduce your taxes now and get your refund money within one or two paychecks!
Looking to increase your income while reducing your taxes? Have you considered all your tax-free income options? There are many forms of compensation you may receive which cannot be taxed by the IRS!
Some Legal Tax Loopholes: Tax-Free Income!
Looking for a pay raise but not more taxes? Assistance in the form of money or services is considered income. Here are several examples of expenses that can be paid or reimbursed by your employer without burdening you with any new income taxes:
- $5,250 for education
- $5,000 for child care assistance
- Adoption assistance and reimbursements
- $125/month for public transportation
- $245/month for parking
- $20/month for using a bicycle to commute
- Health insurance premiums
- Group-term life insurance premiums
- Health Savings Account contributions
- Athletic facility privileges
- Meals provided at the workplace
- Retirement planning services
- Worker's compensation
- Welfare benefits
- Gifts, bequests, and inheritances
- Court-awarded compensatory damages
- Cash rebates from dealers or manufacturers
More examples of nontaxable income
Start your tax planning now so you are prepared once tax season arrives. Tax planning can help reduce your tax bill and earn you a bigger tax refund. Check out our list of tax planning tips that may help you to increase your tax savings, optimize your tax deductions, reduce your tax burden, and ultimately save you money on taxes!
Tax Tip: Plan your tax savings during the months of October, November, and December so you are ready for the tax season.
Top Tax Saving Tips
Deduct the Cost of Working:
Do you pay for parking at work? Your employer can reimburse you $245 per month, tax-free.
Do you use your car for business? You may be reimbursed for business use of your vehicle based on miles driven.
Do you carpool with others to get to work? If you operate a non-profit car pool, any payments your passengers make to you are considered reimbursements of your expenses and may not have to be claimed as income.
Do you ride a bicycle to work? It's good for the environment, your health, and your wallet! You may be reimbursed for the purchase price of a bicycle as well as the costs of maintenance, repairs, and storage.
Have you gone on work related trips? If you keep your receipts, you can deduct the cost of travel expenses, baggage handling, lodging, meals, business phone calls, and even dry cleaning.
Have you lost your job? Changed jobs? It costs money to look for a new job, and you may be able to deduct these job search related expenses.
Did you move to be closer to work or to take a new job? If your new residence is at least 50 miles closer to your workplace than your old home, you may qualify for a deduction of your moving expenses.
Do you work from a home office? You may be able to deduct certain expenses, such as internet and cell phone service, furniture, insurance, and security.
Do you make a low income? See if you qualify, and don't miss out on the Earned Income Tax Credit.
Do you serve in the armed forces? Thank you for your service to our country. You may be able to take advantage of several tax breaks for military personnel.
Do you belong to a union? Union dues and initiation fees are deductible.
Do you make retirement saving plan contributions? You may be able to get a tax credit for your qualified contributions.
Home and Car Tax Savings:
Did you buy an energy-efficient car? If the car you bought is a plug-in electric drive vehicle, you could qualify for a tax credit of up to $7,500.
Did you improve your home with a renewable energy source? You may be able to deduct up to 30% of the cost.
Family-Friendly Tax Savings:
Do you have children or other dependents? You may qualify for a $1,000 credit per dependent with the Child Tax Credit.
Did you adopt a child? There is a special refundable tax credit for which you may qualify.
Are you a student or the parent of one? If so, you have a choice of credits. You may be able to receive up to $2,500 per student.
Did you get married? Congratulations! There are several tax-related implications which you should know about.
Did you get divorced or separated? As with marriage, there are several tax-related implications in cases of divorce or separation. For example, alimony is deductible while child support is not.
Did you spend money on medical care? Most people did, of course. But if you had a particularly tough year, you may be able to deduct any medical expenses which exceed 7.5% of your income.
Do you employ your child in a family business? If you hire one of your children who is less than 18 years old, you may not have to withhold taxes from their salary for social security, Medicare, or unemployment.
Charity Pays - Turn Your Kindness into Cash Back:
Do you donate to charities or religious organizations? Whether you contribute money or goods, you may be able to deduct the value of your donations. Be sure to get receipts for any donation worth over $250.
Have you used your vehicle for charity? You may be reimbursed a certain amount per mile driven in service to a charitable organization.
Other Tax Savings Tips You Should Not Overlook:
Did you gamble and win? Lose? Whether you play poker or the slots, all gambling winnings must be reported as taxable income. However, gambling losses may be claimed as deductions, up to the amount of your winnings. Winnings and losses must be reported separately.
Did you rent a safety deposit box? If you use it to store stocks, bonds, and other paperwork for investments which produce taxable income, then you may be able to deduct the cost of rent.
Tax Calculator and Refund Estimator
Wouldn't you like to know how much of a tax refund to expect? Put your tax planning into action and estimate your taxes with the free eFile Tax Calculator.
Estimate Your Tax Return with Our FREE 2014 Tax Return Calculator/Estimator
Start Using Our Free 2014 Tax Return Calculator
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