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What you must know about tax breaks when planning your taxes

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There are three basic ways to reduce your taxes, and each basic method might have several variations. You can reduce your income, increase your deductions, and take advantage of tax credits.

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What you must know about tax breaks when planning your taxes

  1. 1. What you Must Know About Tax Breaks When Planning your TaxesThe goal of tax planning is to arrange your financial affairs so as to minimize your taxes. There are threebasic ways to reduce your taxes, and each basic method might have several variations. You can reduceyour income, increase your deductions, and take advantage of tax credits. Every tax payer likes to makesure that the IRS gets as little as possible, and to ensure that it happens it is essential take every taxdeduction, credit or other income adjustment you can.Here’s a quick look at a few tax breaks that often get overlooked but that could save you some taxdollars.Extra charitable giftsExpenses incurred while doing charitable work often aren’t counted on tax returns. While its notpossible to deduct the value of your time spent volunteering, but if you buy supplies for a group, thecost of that material is deductible. The use of your vehicle for charitable purposes, such as deliveringmeals to the homebound in your community or taking the Scout troop on an outing brings a deductionof that travel at 14 cents per mile.Moving expensesWhen relocating to another job, moving expenses can be written off, and most taxpayers are aware ofthe same. Fresh graduates who get a first job at a distance from where he or she has been living is alsoeligible for this tax break.Job hunting costsWhile college students can’t deduct the costs of hunting for that new job across the country, already-employed workers can. Costs associated with looking for a new job in your present occupation, includingfees for resume preparation and employment of outplacement agencies, are deductible as long as youitemize.Military reservists’ travel expenses
  2. 2. Members of the military reserve forces and National Guard who travel more than 100 miles and stayovernight for the training exercises can deduct related expenses. This includes the cost of lodging andhalf the cost of meals. If you drive to the training, be sure to track your miles.Child Care CreditMillions of parents claim the Child and Dependent Care Credit each year to help cover the costs of after-school day care while mom and dad work. But some parents overlook claiming the tax credit for childcare costs during the summer. This tax break also applies to summer day camp costs.Mortgage refi pointsRefinance your home loan, allows a deduction of those points, too, as long as you use the refinancedmortgage proceeds to improve your principal residence.Retirement tax savingsThe Retirement Savings Contribution Credit was created to give moderate- and low-income taxpayers anincentive to save. When you contribute to a retirement account, either an IRA or a workplace plan, youcan get a tax savings for up to 50 percent of the first $2,000 you put into such accounts.Educational expensesThe Internal Revenue Code offers many tax-saving options for individuals who want to further theireducation. The tuition and fees deduction can help you take up to $4,000 off your taxable income and isavailable without having to itemize.Partner with an expert and to plan your finances in the best possible way. A dollar saved is a dollarearned, When it comes to taxes, every dollar saved helps and taking the help of a professional will giveyou the necessary support and guidance in all your tax planning issues.
  3. 3. Read More About: FBAR, Entity Formation, IRS Amnesty, Foreign Bank Account

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