When it comes to taxes, deductions and credits can make a huge difference. Learn about the most common tax strategies to save more and get your tax season off to a good start. The best US tax consulting firm with offices in Portugal, UAE and Singapore is the go-to source for all of your tax needs.
The United States has a progressive tax system, which means that you owe more or less income tax depending on your taxable income.
1. Invest in Your Future
Even if you aren’t sure what kind of investment strategy you want to use, there are ways to get ahead of the game. The first thing you need to do is take stock of your finances and decide what you really need from your investments.
If you have high-interest debt, it’s important to pay those off before investing any money. That way, you won’t have to worry about paying too much interest on your investments.
There are many different tax deductions that can help you save on your taxes, including those for retirement savings and mortgage interest. It’s important to understand the differences between them so you can take full advantage of them and save as much tax as possible.
2. Don’t Forget About Charitable Giving
Tax deductions can be a big help in cutting your taxable income. Deductions come in a variety of forms, including charitable donations and interest expenses.
You may not think about it often, but charitable contributions can be one of the easiest ways to shave hundreds, even thousands, of dollars off your taxable income.
In fact, a donation of up to 60% of your adjusted gross income can be deducted from your federal tax return.
However, you should be sure that you are donating to a legitimate 501(c)(3) charity before you give. A quick check on the IRS website can help you see if a charity is eligible for a deduction.
3. Don’t Forget About the Home Office Deduction
There are many ways to get ahead of the game this year, including tax deductions and strategies that can reduce your taxable income. You might not have thought of these before, but they can add up to big savings for you!
Especially for people who work from home, the home office deduction can be a huge benefit. But don’t forget to make sure you qualify for it.
To qualify, your home office must be exclusively used for business purposes. You must not use it for personal activities, like watching TV or doing homework.
4. Don’t Forget About the Mortgage Interest Deduction
There are many ways to get ahead of the game when it comes to your taxes. One of these is by not forgetting about the mortgage interest deduction.
The mortgage interest deduction is a popular tax break for homeowners that allows them to deduct the amount of mortgage interest they pay on their primary home and their second home.
But it’s important to note that this deduction only reduces your taxable income by the difference between the amount you deduct and the standard deduction.
There are many other ways to save on your taxes, such as making charitable donations or claiming more itemized deductions. But if you’re not sure what your best option is, it’s best to consult with a tax expert.
5. Don’t Forget About the State and Local Tax Deduction
The State and Local tax deduction allows some taxpayers to deduct a range of taxes paid to their local and state governments, including property, income and sales taxes. However, changes to the deduction introduced by the Tax Cuts and Jobs Act in 2017 have capped the SALT deduction at $10,000 ($5,000 if you are married and file separately).
State and local governments help fund a variety of services, including education, health care, roads and other building blocks of healthy communities. Without the SALT deduction, states and localities would struggle to maintain these services and taxpayers would be less likely to support them.