Income Taxes Too High? Move!
No one likes paying income taxes, but doing so is one of those things that’s necessary in any civilized society. That said, there’s no reason why you shouldn’t try to minimize your tax bill. You should pay your due, but why pay more than you have to in income taxes? It turns out that tax rates in the United States can vary dramatically depending on where you love. Some states have sky-high income taxes and other states don’t have them at all. On top of that, some cities will tax you, too.
While there are lots of ways to minimize your income taxes, your best bet if you want to truly minimize the amount you have to pay each year would be to move to a place with lower tax rates. Ideally, you’d move to a place where state taxes were relatively low or even nonexistent. That’s not a dream; there are seven states in this country that have no state income tax at all, and a couple more that have taxes that are truly minimal. While you’re always going to have to pay something, these states offer a genuine opportunity to put a huge dent in your tax bill simply by making the decision to live somewhere else.
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Best Income Tax Tips 2016 – How to Save Money
Another year has come and gone and that’s good in some ways and not so good in others. One of the ways that’s not so good is that income tax season will soon be upon us, and unless you’re one of those people who can use the EZ form, you’re going to have to deal with the hassles of filing your tax return and possibly paying taxes. Of course, you don’t want to do that, so the best way to save is to take advantage of the best income tax tips 2016 has to offer.
Obviously, not all tips are going to apply to everyone, but most people should be able to take advantage of at least some of these suggestions. The lucky among you will be able to take advantage of most of them and you’ll likely find that the best income tax tips 2016 has to offer can save you hundreds or even thousands of dollars when you file your returns this April. The key, of course, is to get started early; the last thing you want to do is find yourself scrambling at the last minute to put your returns together. That’s why we’re offering these suggestions now, so you can make note of them and get an early start. Read on for more about the best income tax tips 2016 has for you.
Income Tax Deductions – It’s All About Context
In the United States, we have a hugely complicated income tax system. The tax code, at last count ran more than 70,000 pages and no one really claims to understand it. We all know that we must pay our income taxes each April, and that we are allowed to pay those taxes on our net income after allowable income tax deductions. After that, everyone pretty much gets lost, and they either have their taxes prepared for them or they use tax preparation software to sort out the details. Studies have shown, however, that average taxpayers really have no idea what is and what is not allowable when it comes to income tax deductions. Those taxpayers that do claim to know something about it often wrongly assume that the judgment regarding whether certain things are allowable income tax deductions are binary; that is, something is either an allowable deduction, or it is not.
The truth, of course, is far more complicated than that. In fact, almost all of the things that are considered to be permissible income tax deductions may not be permissible under certain circumstances. Under other circumstances, items that the average person would dismiss out of hand as not being deductible have been allowed by either the IRS or the courts. What’s the determining factor regarding whether certain things are considered valid income tax deductions under some circumstances but are deemed unallowable under others?
Income Tax Tips
Nobody likes paying income taxes, and when it comes to that obligation, Americans are particularly hostile to it. Taxes are essential; they pay for schools and roads and other things that a society needs. Besides, you can’t get out of paying them, but there’s nothing that says you can’t take advantage of available deductions in order to pay as little as possible. There are thousands of ways to save money on your taxes, and many taxpayers aren’t aware of most of them. A deduction that you ignore isn’t going to help you, and the IRS isn’t going to send you a check if you accidentally pay them too much. While the subject of how to maximize your tax deductions is a complicated one and way too lengthy for this article, we thought we’d point out a few general items that can help you take advantage of legal opportunities to save money on your tax returns.
Take advantage of opportunities at work – If your company offers a retirement plan, try to maximize your contributions, as these are made before taxes and thus lower your taxable income. Most employers also offer a flexible spending plan, which allows you to put pretax earnings aside for anticipated day care or medical expenses. Be aware that this money goes away at the end of the calendar year if you do not spend it, so you will need to carefully consider how much you wish to contribute. Don’t have a 401(k) plan at work? You can open an IRA instead.