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.
What Is Income Tax Reduction?
This is adjusting your paycheck income tax withholding on Form W-4. For example, if you received a tax refund check this year or are expecting a refund next year, you may decrease the amount of taxes withheld from your paycheck so you get your refund money within one or two paychecks!
Find out how to reduce your taxes now. If you're not sure how to increase or decrease your tax withholdings, use the free efile.com Tax Withholding Assessment Tool!
What Is Tax-Free Income?
Tax-free income is compensation you receive which cannot be taxed by the IRS. Looking for a pay raise but not more taxes? Assistance in the form of money or services is nontaxable 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
- $260/month for public transportation
- $260/month for parking
- 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
How Can Tax Planning Help Me Save Taxes?
Tax planning can help reduce your tax bill and earn you a bigger tax refund. Start your tax planning now so you are prepared once tax season arrives. Check out our list of tax planning tips that may help you 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 tax season.
How Can I Save Taxes on Everyday Expenses?
Read on for various tax saving tips for everyday living!
How Can I Deduct the Cost of Working?
Here's how you can save taxes on your work expenses:
- Deduct Your Work-Related Parking Expenses-Your employer can reimburse you up to $260 per month tax-free for parking expenses you paid.
- Deduct Your Car Mileage for Business-You may be reimbursed for business use of your vehicle based on miles driven.
- Consider Your Carpool Income Tax Free-If you carpool with others to get to work, any payments your passengers give you are considered reimbursements of your expenses and may not have to be claimed as income.
- Deduct Your Travel Expenses-If you go on work-related trips and keep your receipts, you can deduct the cost of travel expenses, baggage handling, lodging, meals, business phone calls, and even dry cleaning.
- Deduct Your Job Search Expenses- If you lost your job or changed jobs, you may be able to deduct these job search related expenses.
- Deduct Your Moving Expenses- If you moved to a new residence that is at least 50 miles closer to your new or current workplace than your old home, you can only claim a deduction on your moving expenses if you are an active duty military member.
- Deduct Home Office Expenses-If you work from a home office, you may be able to deduct expenses such as internet and cell phone service, furniture, insurance, and security.
- Claim the Earned Income Tax Credit-If you have a low income, you may qualify for the Earned Income Tax Credit.
- Claim Tax Breaks for Being in the Military- If you are in the military or armed forces, thank you for your service to our country. You may be able to take advantage of several tax breaks for military personnel.
- Claim Tax Breaks for Being in a Union- You can deduct union dues and initiation fees if you are in a union.
- Claim the Saver's Tax Credit-You may get a tax credit for making qualified retirement saving plan contributions.
How Can I Save Taxes on Home and Car Expenses?
Here's how you can save taxes on your home and car expenses:
How Can I Save Taxes on Family Life?
See how you can reduce your tax payments as a spouse, parent, or student:
- Marriage and Taxes-If you got married this year, congratulations! Being married could help you save money on taxes.
- Divorce, Separation, and Taxes-If you get divorced or separated, your new status affects your taxes. For example, alimony is deductible while child support is not.
- Claim the Child Tax Credit-If you have children or other dependents, you may qualify for a $2,000 credit.
- Claim the Adoption Tax Credit-If you adopt a child, you may qualify for the refundable Adoption Tax Credit.
- Claim Student Tax Credits-If you are a student or the parent of one, you may be able to claim a tax credit on your tax return. For example, you may be able to receive up to $2,500 per student by claiming the American Opportunity Credit.
- Deduct Medical Expenses-If you spent money on medical care and you had a particularly tough year, you may be able to deduct any medical expenses which exceed 7.5% of your income.
- Claim Tax Deductions for Family Business-If you employ your child less than 18 years old in a family business, you may not have to withhold Social Security, Medicare, or unemployment taxes from their salary.
How Can I Deduct My Charity Donations?
Turn your kindness into cash back! See how you can save money on charitable donations:
What Are Other Tax Savings I Should Not Overlook?
Save tax money on these other expenses:
- Report Gambling Winnings and Claim Losses-Whether you gambled and won or gambled and lost, it affects your taxes. All gambling winnings (poker, slots, etc.) must be reported as taxable income. Any gambling losses may be claimed as deductions up to the amount of your winnings. Winnings and losses must be reported separately.
- Claim Deductions for Rental and Other Miscellaneous Income-If you rent a safety deposit box to store stocks, bonds, and other paperwork for investments producing taxable income, you may be able to deduct the cost of the rental.
How Do I Find Out If I Am Expecting a Tax Refund Or Owe Taxes?
Put your tax planning into action and estimate your Tax Return with our free E-File Tax Estimator and Calculator.
Please bookmark and re-visit this page often to ensure that you are up-to-date on the latest tax saving and tax reduction tips.
