Everyone dreads that time of the year when taxes need to be paid; no one likes to pay taxes but you can’t avoid paying them. The money collected from taxes is used by the government for public purposes such as infrastructure, transport, water, education, defense and other public services. However, if you know how to save taxes, you can cut down you r income tax bill and thus save a lot of money. This article will give you many ideas which you can follow to save your taxes effectively.
Save tax through charity
- The US tax laws offer many charitable provisions that allow you to help others and thus reduce the amount you need to pay as tax.
- Take a look at the IRS Publication 78 and search for all the qualified charities to find out if the charity where you want to donate qualifies for tax deduction. Remember that any gifts to churches, temples, mosques and other religious places qualify for tax deduction irrespective of whether they are listed in Publication 78 or not.
- If you have clothes, furniture, electrical appliances, computers etc that you are not using any more, don’t store them or throw them away, as they can be considered for tax deduction purposes. You can ask for a qualified appraisal of your items if their collective value is more than $500 and attach IRS Form 8283 to your income tax return.
- You can also donate your car, boat or other vehicle to charity and get qualified for deduction. Make sure that you attach Form 1098-C to your return.
- You can make charitable contributions to Salvation Army, Goodwill or other charitable organizations. Remember that you take a receipt from them, as these donations are eligible for deduction from the income tax you are required to pay.
Save tax by going Green
- Energy efficiency is one of the easiest ways through which you can lower your tax amount.
- Install energy-efficient appliances in your home such as energy-efficient windows, boilers and furnaces. You will not only lower you energy consumption in this way but also get a tax credit of around $500.
- You can get an additional $2000 tax benefit if you install a geothermal heat pump in your house for heating and cooling your home.
- If you install a solar power system in your house, you will be qualified for receiving up to 30% credit for the installation.
- If you install a micro turbine system in your house, you will be able to claim $500 for every half kilo watt of capacity in the system.
Save money on Property Tax
- When it comes to saving money on your property tax, it is essential that you have a good knowledge about the current housing market situation in your area.
- Even if you find that property rates are decreasing in your area, don’t assume that your property tax will also lower.
- Try to find out the rate at which homes in your area and nearby are selling and gather official records for the same to keep as evidence for supporting you claim for a lower property tax figure.
- Consult your local real estate agents and property tax assessor to get an exact idea about how much property tax you will be required to pay and if there are any ways to lower it.
- Once you have all the required information with you, you can make an appeal to the property tax office in your state and be prepared for the questions they might ask you, as they will not be ready to lower your property tax.
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