Paying Less and Saving Money on Taxes

Tax season often sneaks up on a person and many people are not prepared to see what happens when their taxes are done come the beginning of the next year. Many families are scared to death when it comes to figuring out their taxes. This is because taxes are the largest expense that a family will run across through out the year. Often times a family will find out that they are paying more in taxes than what is required. There are many tips to help you not fall into this category.

Computer

One of the most popular ways to help you save taxes is to purchase a computer program such as TurboTax or H&R Block’s TaxCut. These programs are becoming more in depth every year can help you save money in several ways. By using one of these programs you will find that you will be able to e-file your tax return. This will help you to save on filing costs or having to pay an accountant or another type of tax preparer. A bonus is that because you have filed electronically you should get your money back in about two weeks.

Itemize

People sometimes lose out on money they are deserved because they do not itemize the deductions that they have. The reason why they do not itemize is because they are trying to save time. However what they are really doing is losing out on probably hundreds of dollars. Taking the time to itemize can help you get a larger return in the end. It is definitely worth the additional time that is need.

Purchase A House

If you are a person who has thought about purchasing a house but has not yet made the final decision you are losing out. You could be paying less tax by being able to deduct interest on the mortgage loan. If you are living in a home but are renting from someone the person you are renting from is receiving the extra dollars from your house. You might want to consider buying the house from your landlord.

401K

Another option for paying less tax is to sign yourself up for a 401K plan. This is a plan that puts money from your paycheck into a retirement account for you. The good thing here is that the money that is transferred into the 401K is not taxable income. Therefore you are paying less in taxes.

There are also other benefits to a 401K such as being able to borrow money from the plan. Many people with bad credit often turn to personal loans with bad credit lenders. With a loan from your 401K plan this will not be necessary because in reality you are borrowing from yourself.

Transfer Credit Card Debt

Another popular way to help you save money when it comes to tax time is to use the equity you have in your home as a debt consolidation loan. Your credit card interest is not tax deductible but the interest from a mortgage loan is. Many people will use a refinance or a second mortgage to help pay off their debts and then claim the interest on their taxes.

If you take the time to do your taxes the proper way you will find that you will have many more tax deductions and will owe a lot less in the amount of taxes that you pay. A little patience while doing the taxes can reward you with more money in the end.

Author Bio

Darrell is a guest post contributor. He loves to write on finance based issues.