Here is How to Save Your Tax

tax

No matter if you are a businessman or a salaried person, by the end of every financial year, you must be running to make bigger investments in order to save a lot on tax payments, and this you do sort of forcefully, without knowing much about the different alternatives that might come in handy to minimize your tax payments. If you are belonging to the group of salaried people, it would be much easier for you to plan your tax payments, but what happens most of the time is that you neglect the much needed tax planning and as a result of that, you end up spending all your hard-earned money paying tax. The probable reasons behind this negligence might be lack of awareness about the different incentives, rebates and allowances that come under the Income Tax Act or lack of sufficient time to make the tax planning. Here are certain ways following which you can save tax from your salary -

 

  • Consider taking home loans – Home loans might turn out to be an effective tool in saving lots of tax.  First of all inform your employer about the home loan that you are supposed to pay and the moment you get the respective form, ensure that the interest that you will be paying will be according to the loss that is shown in the House property. If the current loan does not prove to be effective enough, simply request another loan with a bigger amount.
  • Earn tax-free income – Certain types of income are not subject to tax at all. The best possible way to avoid tax is to earn as much as possible tax-free income. Consider selling your home as the home sale tax will be excluded, investing in municipal bonds, saving money for the education of your children, receiving health insurance, contributing to a health savings account, giving some investments to your children, and also ask for other kinds of employee benefits.
  • Maximize your tax deductions – Probably the most trusted and effective technique to reduce taxable income is to opt for tax deductions. The more deductions you can manage, the lesser tax you will have to pay. Those who have their own businesses, can deduct all their business expenses such as operating costs, office space, travel costs etc. Every taxpayers is supposed to itemize their deductions and they are entitled to take a standard deductions. Itemized deductions are basically personal in nature and these include property taxes, home mortgage interest, state income tax, charitable contributions etc. Check out how you can increase your personal or business itemized tax deductions.
  • Take advantage of tax credits – Obtaining a tax credit is another best trick that is applied for paying no taxes at all because it reduces your tax payments to a great extent. Some examples of tax credits include making certain home energy improvements or buying a hybrid car or adding solar water heater or a insulation to your home. There are also education tax credits and child care tax credits that you can avail.