First, allow me to clarify here that you can’t just get rid of taxes or evade them. That, my friend, is a crime. It is however excruciating for employees to see that they are paid their salary after the deduction of so many taxes.They work, put in their best, and when they look at even a few bucks removed from that income,it is quite a setback for them. Here are a few ways you can protect your income from those taxes,but it is better to pay the taxes if you have the potential to, yet it doesn’t imply that you get out of paying taxes altogether.
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People want to pay less to the government and save as much money as they can. You can’t avoid the IRS, but you can take steps to protect your income.
Credits and deductions can reduce your tax bill if you’ve earned them. However, that doesn’t mean every tax-saving tactic is right for you. For instance, some people go so far as to invest money in something that saves taxes on the front end but costs them more in the long run.
That’s why it’s always a smart move to talk with a tax professional to ensure you understand how your investments impact your taxes.
[BUTTONS2]You get your paycheck and see the nice big “gross” income number on top
of the pay stub. Scroll down a bit and you’ll notice that the “net” or actual
amount that is deposited into your checking account is significantly smaller.
That’s because your earned income gets taxed in many ways – federal, state,
Social Security, Medicare and more. Taxes are difficult to avoid, but there are
many strategies around to help ward them off a bit.
Municipal bonds:
There are always taxes involved in investments as well as savings. You can choose to not pay those by buying municipal bonds. These municipal bonds are mostly tax-free and the interest you receive doesn’t become a victim of taxes. Although the net outcome you get from these bonds is not extremely high, it is still preferred since you don’t have to pay any taxes.
If you have savings or investments, there are ways to avoid taxes on the
income from those investments. Most municipal bonds are federally
tax-free. When you buy an individual municipal bond or a municipal bond fund
from your own state, then the interest payments from that income are also
tax-free. The downside of municipal bonds may be the lower income than from
comparable taxable bonds. Find out by checking the bond’s tax equivalent
yield.
IRS Credit:
There are many IRS tax credits that
reduce your taxes dollar-for-dollar. For example, the earned income
credit helps lower-income taxpayers reduce their tax bills.
The American Opportunity Tax Credit offers a maximum of $2,500 per
year for eligible students. There is the saver’s credit for moderate and
lower-income individuals looking to save for retirement. Lastly, the Child
and Dependent Care Credit helps offset the expenses of raising your
children.
This scheme is mostly for the people who have a low income and cannot afford to pay high taxes.They
can get the IRS credits and reduce their tax payments. of thetaxesare
reduced.
Start a Business:
You can get your income screened from taxes by starting a new business which will let you get the advantage of the new startup and the income in the start won’t face many taxes.This is a fantastic way since you’ll have a new venture to look another and reduced taxes to pay.