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Each and every person is looking out for ways which may reduce the amount of tax that has to be paid to the government. The following article contains few ways which will lessen the amount of income tax anytime in the present and future. It is mandatory that every family sort to different ways which may reduce their tax bills.
#Funding the retirement-It is a known fact that saving money is a good retirement option, but it is great news that these retirement funds can help in reducing your taxes. By saving money for retirement you can reduce the adjusted gross income, which in term means that you are reducing the value of your income that is taxable.
#selling not-so-good stocks - By looking at the portfolio select and sell the shares whose present stock value is lesser than cost price. Selling of these kinds of shares is considered as tax deductions. On contrary to it, if the shares are sold at a better price than the cost price, you will have to pay capital gain taxes for it. It is good option to sell the shares that has given you a loss while you are trying to reduce your income tax.
#obtaining mortgage-Not owning a house is one of the major disadvantages when you're looking out for tax reductions. The interest that is paid on mortgage is tax deductible. To add on to it, in the preliminary years of mortgage, all the house payments are paid as interest which helps you save bundles.
#Second mortgage-Other debts like credit cards and car loans are a good option to reduce the amount of income taxes By taking a Home equity loan and paying off debts with this money would help you to reduce the income tax. The interest that is paid on home equity loan is tax deductible but the loans taken for cars and credit cards are not tax deductible.
#Deduction in tuition fees-The fees that you pay in college for your child is tax deductible, but the fee must be paid from your taxable income rather than a tax free savings account like the "529" plan. You can also reduce your taxes in the tuitions that you take, incase if you don't have a child.
#Energy efficient home-On purchase of a new home appliance look out for the government's energy star rating as these appliances with energy star rating are eligible for tax deductions. Apart from the above, a replacement of old appliances with new energy efficient ones will help you save money on utility bills.
By following the above points you can reduce your income taxes to certain extent.
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