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How To Save Money On Your Taxes

The very thought of getting the paperwork for taxes sends shivers up my spine, and the pain get all the more acute as the deadline of April 15th approaches. Mixed with the financial burden it entails, the month of April has always been a challenging one for me ( and for everyone else ,I suppose).

And in my confused state of mind I tend to forget that I can considerably reduce this tax burden if I keep some things in mind. On the way, I have learnt a few tricks about saving taxes. The most important is the personal money I spend on my business. Due to many reasons, I often meet certain business expenses by paying through my credit card. In the end when I prepare my tax papers, these cards are often taken as revenue. I don't have to tell you, that we have to pay taxes on what we earn. Therefore I end up paying for something, which I have not really earned.

Step one is to calculate all the money you have put into the business and carefully avoid making it a part of gross revenue. If you are running a small business, it is worth your while looking at a Pension Plan. Now, this has a two-fold benefit. One, your employees love it and two it saves tax. If you spend on a Pension Plan for your employees you are entitled for a tax credit of $500. This is quite a lot, when you consider that, the scheme provides for credit on your tax liability and not a deduction from your gross revenues. In effect, you pay $500 less tax. This is what I call eating your cake and having it too!

Each year the government comes out with some welfare scheme or other such program, for contribution to charitable institutions. If you are a regular contributor to any of these, you can claim some tax relief, this will be deductible from your gross income. Have you purchased a SUV during the past financial year? If it is over 6000 pounds you can avail yourself of a $25000 deduction, while on the balance amount you can claim depreciation. If it is non-SUV truck, you are not restricted to $25000 deduction. I am sure you have worked out the savings by now.

There are a host of other tax savings by way of deductions, exemptions and most importantly credit. Some states do not levy income tax, in which case you should try and save through the sales tax route. Costs on discrimination lawsuits can be taken advantage of by those involved in such cases.

It is sometimes tedious to work out all the deductions tempting us give up and pay up. But let me assure you that there are so many ways to save your money when you file your taxes, with so much money to save that it is worth your time. Especially when you consider that almost the same laws are applicable year after year. The first time may be the only time you spend your time, rest of the years you will know when and where to save.

by Andrew Jamaz

“How To Save Money On Your Taxes”