The Best Ways to Cut Tax Expenses

Everyone wants to reduce their tax liability.  None of us want to pay Uncle Sam more than he deserves.  It is your right; some might argue it’s your obligation, to reduce the amount you owe, legitimately.  In attempting to accomplish this, you do not want to miss out on any honest opportunity to cut your tax expenses.

·If you are currently paying interest for a student loan, you may be eligible for up to $2500 in tax credits.

·When your medical expenses go above 7.5% of your Adjusted Gross Income, you might be able to claim them as deductions.  Some of the allowed deductions would be for medications, travel expenses to and from doctors’ offices, weight reduction programs, and smoking cessation trainings.

·Make charitable donations.  Apart from giving money, you can give property like clothing, furniture, or appliances.  Some charities, like Purple Heart, will even accept donations of cars or boats.  These could all be tax deductions, so make sure to get a receipt.

·Do volunteer work.  If your volunteer program does not reimburse you for out of pocket expenses such as travel to and from places where you are volunteering, meals, and lodging, you can claim these expenses.  You may even be allowed to deduct a mileage expense.  Again, keep receipts and records.

·Make one early mortgage payment.  If you make your January mortgage payment prior to December 31st, you can deduct the interest from the current year.

·Don’t forget to deduct mortgage interest.  For homeowners, this could be your largest tax savings.

·You can deduct miscellaneous expenses if they run higher than 2% of your Adjusted Gross Income.  Miscellaneous expenses can be things like tax preparation costs, work uniform expenses, subscriptions to professional journals, union dues, and costs of renting safe-deposit boxes wherein you keep investments.

·If your home has been refinanced and you had to pay “points” in the procedure, those points may be deductible.

·Put money in a Flexible Savings Account.  Your employer may offer the option of a Flexible Savings Account as part of your health care.  With a Flexible Savings Account you can have money deducted from your paycheck before taxes and use it for out of pocket medical expenses you incur in that calendar year.  This is a tax savings because the money is removed from your pay pretax.  Be careful, however, because you must spend this money on out of pocket medical expenses and you will lose any surplus at the end of the year.

·Don’t forget to deduct Home Equity Line Of Credit (HELOC) interest just like mortgage interest.