Best Ways to Pay less income tax

1

Hold assets for a longer term

It’s always a good idea to invest with a view to build wealth. However, when you sell an asset to book profits in the short term, your capital gain is termed as short-term capital gain. Holding the same asset (real estate, bonds, mutual fund units, etc.) for more than a year brings along the benefit of a favorable tax treatment for long-term capital gains.

Long term capital gains are taxed on preferential basis depending on your income level at 0, 15, and 20 percent. Short term capital gains, on the flip side, are taxed at the taxpayer’s ordinary income tax rate. 

VOTE:
REPORT
Written by Alan Vega
11 months ago
2

Write off business travel expenses even while on vacation

Combine your vacation trip with a business trip and you can reduce the costs by deducting the percent of expenses spent for business purposes. This includes hotel stay and airfare. Talk to a tax professional to make the calculations correctly.

VOTE:
REPORT
Written by Ernesto Sawyer
8 months ago
3

Make charitable donations

Charitable contributions made with checks, payroll deduction, cash, and donation of clothing and goods are all deductible. People usually forget to add their non-cash contributions while filing taxes. You need to itemize your charity to claim a deduction.

VOTE:
REPORT
Written by Felix Villarreal
8 months ago
4

Get credit for higher education

The government offsets the cost of higher education by offering valuable tax credits. The American opportunity tax credits provide a maximum credit of $2,500 per student per year and it can be claimed for the first four years of college.

Get credit for higher education

VOTE:
REPORT
Written by Antonia Lyons
8 months ago
5

Itemize state sales tax

If you live in a state without income taxes, then state sales tax break is a great option for you. Add any and every major purchase in the Schedule A form. The federal tax deduction for state and local taxes is capped at $10,000 from all sources. 

VOTE:
REPORT
Written by Alicia Boyd
8 months ago
6

Claim a home office deduction

If you have a side business at home or if you are self-employed and work from home, then you can opt for a home office deduction. To qualify for this deduction, the home office space must be exclusively and regularly used for business purposes. For example, if an extra bedroom is used as your home office and it constitutes 1/4th of your home, then you can deduct 1/4th of rent and utility fees.

VOTE:
REPORT
Written by Percy Torres
6 months ago
7

Open a health savings account

Open health savings account if you are eligible for a high-deductible medical plan. Contributions to these accounts offer tax-free withdrawal for qualified medical expenses, immediate tax deduction, and grow tax-deferred. Any balance left at the end of the year can roll over indefinitely like assets in a retirement account.

VOTE:
REPORT
Written by Clyde Hughes
8 months ago
8

Park your money in municipal bonds

Municipal bonds are issued by a state or local government, and pay you a fixed amount of interest until the bond’s maturity. Upon maturity, you receive the entire face value of the bond.

Park your money in municipal bonds

The interest on municipal bonds is exempt from federal taxes, and some states also offer a similar benefit of exemption – but not all states do. The exemption particularly benefits investors in the higher tax brackets because of the higher tax equivalent yield. 

VOTE:
REPORT
Written by Brian Dyer
6 months ago
9

Use your side hustle to claim a business deduction

Freelancers and self-employed individuals are eligible for scores of tax deductions. A few of the business deductions include advertising, shipping, business-related vehicle mileage, website fees, professional publications, percentage of home internet charges used for business, office supplies, and any expenses incurred to run your business.

You can deduct tax for health, dental, or long-term insurance as well if you pay for it yourself.

Just ensure to keep all the receipts with the right documentation at the time of filing the tax.

VOTE:
REPORT
Written by Chester Vasquez
5 months ago
10

Deduct half of your self-employment taxes

For employers who receive healthcare benefits from their company, their employers split the cost for Social Security and Medicare programs. Self-employed individuals are responsible for paying the entire amount themselves. So, to compensate for the extra expense, the government lets you deduct 50 percent of the amount paid on income taxes. You don’t need to itemize to claim this tax deduction. 

VOTE:
REPORT
Written by Eric Henderson
8 months ago

Do you know the BEST WAY TO Pay Less Income Tax?

Share this page

Related topics

image for topic 'Compound interest'
Best Ways to

Compound interest

image for topic 'Budget as a couple'
Best Ways to

Budget as a couple

image for topic 'Create wealth'
Best Ways to

Create wealth

image for topic 'Do market research'
Best Ways to

Do market research

image for topic 'Change your hair'
Best Ways to

Change your hair

image for topic 'Retire young'
Best Ways to

Retire young

image for topic 'Work from home'
Best Ways to

Work from home

Add new topic

Do you have a suggestion on a new topic? Please contribute!
Best Ways to
This site is protected by reCAPTCHA.
The Google Privacy Policy & Terms of Service apply.

Explore other topics

Disclaimer: This web site gathers "Best Ways" to do things from contributing users. Any application of ANY recommendations set forth on this site is at the viewer's discretion and sole risk. Examples (non exhaustive): Some of the topics relates to health (physical or mental). The recommendations set forth on such topics (or any other topic) are not intended as a substitute for the medical advice and supervision of your personal physician. Other topics relates to economics, investments and legal issues. None of the recommendations set forth on such topics (or any other topic) are intended as investment, tax, accounting or legal advice. Your use of the Information presented to you is at your own risk. The Information is provided 'as is' and without warranties, either expressed or implied.
For https://best.ways.to to operate properly cookies are needed. By surfing further on this site you consent to us setting cookies in your browser as well as to our privacy policy and our terms of service. Click this button to accept / remove this message.