Paying tax is often a job involving a lot of trouble and stress. But since it is an unavoidable part of our life, and it’s not possible to get rid of this altogether, you must try to lower your tax liabilities. There are a number of ways by which you can minimize your tax burden. For New Yorkers, it is advisable to Consult a New York Tax Lawyer in order to get customized solutions. Here are certain effective ways that will help you do the same –
1. There are different employer participation plans like health savings account, health insurance, 401k retirement plans, childcare expense accounts etc, which you can take advantage of. Since contribution towards these plans gets subtracted from paycheck pre-tax, your taxable income would get lowered, leading to reduced tax liabilities.
2. Make it a point to invest in a retirement plan, even if your company doesn’t offer a 401k program or if you are self-employed. This would help to lower your tax liability as it gives you a tax credit.
3. If you don’t have a health savings account, gather receipts for prescriptions, medical bills and co-pays. If the total medical expense happens to be more than 7.5% of your gross income, a deduction is possible, which in turn will lower your tax responsibilities.
4. If you have been living in a rented house for the past few years, try to purchase a home now. This is important because buying a home not only helps you build equity, but also minimizes your tax burden as mortgage interest is eligible for a tax deduction.
5. If you have dependents, claim them properly as each of them reduces the amount that you have to pay taxes on.
In addition to following these five simple tips, it is advisable to hire the professional help of a New York tax lawyer who can guide you on what deductions to claim and what tax benefits to apply for, all of which will significantly reduce your tax liabilities.
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