Tax Planning Before the End of the Year
Taxes are the amount that a person has to pay to the government at the end of the year from its total income. This is important for those people who come under the income tax slab which is different for different countries. However, weaker sections along with lower middle class families are not included among this slab. Those people who have to pay the taxes by the end of the financial year have to prepare themselves according to their income and other things. There are certain ways through which they can go for a tax saving policy which is legal and valid to save certain amount only.
The first case is through Adjusted Gross Income. This is the mode through which all the costs extra added into the net income can be deducted after which the original income comes out. This is the primary stage from where every person starts its tax planning. The main formula for adding the AGI is all income from all sources less adjustments made to the income. It can be understood with the basic formula that more the income of a person, more the tax he has to pay. Inversely, the less income will give lesser taxes. The best way to deduct the tax rate is to cut down the three main pints that are included in the AGI. These three things are state taxes, gifts or charity and mortgage interest.
There is one more special case involved that if a person gets married then he can reduce the tax rate or else he can have the numbers of burden on himself so that he can show to others through which e can make the changes. There are many tax credits which are also included in the income. These tax credits are college expense, retirement savings and adoption of a child. Through all these measures, it is easier for a person to reduce the tax burden from his shoulders. However, adopting a child is not everyone’s cup of tea so they can go for some college studies through which they will get some deductions. Adding on, these classes moist not are based on their career prospects.
There is the last mode available to a person in this context. He can withhold large numbers of amount during the year. More the amount he will held during the year, more he will get tax benefits while filing the tax. These are simple steps through which a person can save his taxes.
Blog written by Liz at Express Tax & Bookkeeping Services. For any tax consulting please contact us at 954.788.2870 or visit www.etbsfl.com
Blog by Liz Soria, CPB, ATP
Express Tax & Bookkeeping Services