Are you aware of the tax breaks and loopholes that cost the IRS billions of dollars each year? The following areas are legal ways to keep your money and lessen the amount of tax that you send to the government each year.
When an employer provides health insurance as a benefit for its employees, the premiums that employer pays are one of the few compensations an employee is not taxed for. Over the next five years, the IRS will miss out on $760 billion tax dollars thanks to this little perk. Pension plans and retirement funds are tax-free until the worker takes out the money—estimated as costing the IRS an additional $548 billion over the next five years.
Investing and Charity
Many Americans are aware that donating their money to charity is tax deductible, but what about items and assets? The value of goods can be written-off as tax deductible when given to a nonprofit association.
Capital gains and dividends are also taxed at lower rates to encourage saving money and investing. Both investor savings and willed assets are ways that the American can save money from going into the government pot.
Taxes and Interest
A huge tax break for homeowners is the ability to deduct interest payments from taxes. Secondary homes and even mobile residents, like a boat or RV, may be claimed for tax breaks as well.
For those with small incomes, especially those supporting families, the Earned Income Tax Credit (EITC) allows refunds even to those who don’t owe income taxes. Claiming state and local taxes as a write-off will also lower tax bills—property taxes and sales taxes often serve as a nice deduction on federal taxes. Retirees who live off of Social Security usually don’t owe taxes on those earnings, though there are a few exceptions.
Minding Your Loopholes
By remembering these reductions in taxes, you will be able to make choices that keep your hard-earned money in your pocket. These tax breaks might be bad news to the IRS, but taking full advantage of the tax laws will be good news to you come next April.
If you are in need or IRS tax help, and would like to speak to a tax attorney, contact Todd Unger today!