If you have a good income, you are probably looking for ways to reduce your taxes. Although you have to pay taxes each year, there are several legit ways to keep more money in your pocket – even if you are in a high-income bracket. Some of those methods can help you reduce your tax liability considerably.
Improve Your Homes Energy Efficiency
Several tax breaks are given for people who add energy-saving features to their homes. This can help you if you have an older home, or simply want to make some changes to improve it. Tax credits can enable you to deduct up to 30% of the cost for projects such as solar-powered water heaters, wind turbines, and geothermal heat pumps. There is no limit to the size of the claim you can make unless you add fuel cells.
Deduct Business Expenses
If you have your own business, you can deduct many of the expenses for it. You can even take advantage of trips and vacations if you attach a business element to it. Good records are essential and the type of business may affect how much you can deduct. You can deduct things such as rent for a building, insurance, utilities – including cell phones and Internet service, mileage, repairs, equipment, and more.
Invest in a Health Savings Account (HSA)
These health insurance policies have a high deductible of at least $1,350 for an individual or $2,700 for a family. Contributions to this policy are made pre-tax and you can contribute up to $3,500 as a single or as much as $7,000 per year for a family. Pre-tax dollars means that you deduct it from your income before any taxes are taken out, potentially letting you save a lot of money. Money can be taken out from the account for medical purposes without any taxes being charged. This is a good idea if you and your family members are younger and in good health. Interest is earned each year towards retirement.
Invest in Retirement Accounts
You can also reduce your taxes by depositing money into retirement accounts such as an IRA. Money going to an IRA or a 401(K) is deductible from your income. You can contribute up to $6,000 if you are less than 50 years old and up to $19,000 into a 401(k). It is also possible that you may make enough money that this option is not available. An extra $1,000 can be added each year if you are 50 or older.
Make Contributions to Charity
Contributions to a religious organization or charity can also reduce your taxes if they amount to more than $7,000. The one catch is that you must itemize these contributions, so only amounts more than the $7,000 are eligible. Material items can also be donated to charities, but you must have a receipt from the agency for them – one that reflects a realistic value for the items given.
You can learn many more ways to reduce your taxes if you are in a high-income bracket at Taxfyle. The taxfyle agency has more than 1,600 professionals that can help you pay less. Contact us today and learn more about our app and services.