How to reduce the tax burden, this year?

If you are not planning to minimize your tax, you would be paying a lot more than you are spending. There are a few last minute tips to minimize the tax burden.

Capital gains

If you have capital gains, try to sell some loss making investments and offset the gains with the loss. The losses can be carried forwards and can be used, the next year. You can include all the donations, subscription to the magazines and other income related expenses like insurance premiums to the tax deduction. Even if the losses exceed the gains, you can use them, the next year.

Private health insurance

Medicare adds one percentage to your tax burden, if you are earning 88 thousand and more and single and if you are a couple, the limit is 176 thousand dollars. The percentage can increase up to 1.25. It is better to have a private health insurance as the charges would not be added if there is an appropriate hospital cover for the family. Talk to the insurance agent to learn more about the process.

Work related expenses

Include all the work related expenses like, phone expenses, computer expenses, rental property deduction and office claims. If you are working from home, you can deduct a part of the utility bills and other related claims. Make sure not to overstate the interest deduction on mortgages. Rental property deduction in the place where most of the people go wrong.

If you have a work from home settings, there are a lot of points to be considered- the area of the place used for the work should have a certain criteria to be taken as a work area. There are a lot of articles that talks about these specifications. One can opt for help to know the right way for filing the deduction.

High earners

The people who have an income more than 180 thousand dollars per year have to pay 2 as tax for the amount exceeding it. To avoid it, take loans for investments, in which the loans are tax deductible.

It is said that people usually overstate or understate the deductions. It is better to hire a professional to help you with the tax filing. Your accountant can also help you with the same. especially when it comes to sorting work related expenses. If you happen to plan to save move and avoid hiring help, you might lose more to the government in the form of tax.

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