How Can I Save Tax Dollars? Tax Loopholes for Honest Taxpayers
How Do I Save on the Price of Giving?
When calculating your taxable income, make sure to include charitable donations or gifts extended to family members. During the 2017 Tax Year, an individual can give up to $14,000 to children or grandchildren without any gift tax (a couple could jointly give a gift of up to $28,000 tax-free). Any gift over that amount is subject to a gift tax, which is incurred by the giver, not the recipient.
How Do I Save on Capital Gains and Inheritance Taxes?
To take advantage of the current battered market, you can create a personal residence trust that transfers ownership of your home to your children but allows use of the home for the life of the trust, usually 10-20 years. Creating the trust now allows your inheritors to gain your property at the currently depressed values while you still retain the property as your residence. The home’s estate tax value is locked in at the beginning of the trust, taking advantage of the currently depressed housing market. If you live longer than the trust, the home is no longer in your estate.
What Do I Do With My Unused Tax-Favored Spending Accounts?
Flexible spending accounts are an enticing employer offer but do not roll over to the next tax year. Any money that was left in an employer provided flexible spending account may have been forfeited on December 31. However, your employer may have granted a two and a half month extension. In that case, check with your employer for more details and use the remainder of your benefits before they disappear.
Can I Deduct Now and Pay Later?
Deductions apply to more than the cash or debit purchases you made in the current tax year. You can also take deductions for the tax year in which you charged goods or services with a bank issued credit card even though you may pay for those charges after that tax year. This can be useful to small business owners or self-employed service providers that can claim depreciation on business property purchased on credit.
What Other Ways I Can Save on Taxes?
Contribute to a College Savings Plan
A great way to lower your taxable income is by contributing to college savings plans for your children or grandchildren. When your children or grandchildren go to college, payouts from the accounts that are used for tuition, fees, and books will be income tax-free.
Deduct Mileage Expenses
You can deduct a certain amount for using your vehicle for work or business, medical, or charitable purposes. Find out the latest deductible mileage rates.
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