How do I save tax? Each quarter and year as taxes come due, do you feel that you paid more in taxes than you were expecting to and that you may have made some of the common tax mistakes that could have saved you money?
Taxes really are one of the biggest obstacles that prevent people from accumulating wealth and generating cash flow. Each year, people round up their tax documents and haul them to the tax preparer, then become frustrated when their tax preparer tells them the bad news of how much they owe. In the back of their minds they feel like there should have been something more they could do to save tax but they don’t know what to do differently, so they don’t do anything.
America’s tax law has become so complex that most folks do not know what can be done in order to minimize their taxes. To many folks it seems like their tax preparers do not know what can be done either. To save tax is an unconquerable mystery. The sad thing is that there are strategies to save tax. My accountant tells me that he continually reviews tax returns and finds lost opportunities from missed deductions and just plain dumb mistakes.
6 Tips to Save On Taxes
The good news is you are not alone in this mysterious maze! You can learn things to do to help you save tax. Here are some good examples.
- Always deduct your business expenses. Many folks forget to keep track of those that were paid with personal funds, but you can save tax if you do. Get an envelope and stick those troublesome business receipts that you pay personally in the envelope as you pay them and then make sure to deduct these items on your tax return.
- Remember to maximize your business car and travel deductions. There is a long list of deductible items that relate to your car and travel expenses which can save tax for you.
- You can even deduct some of the business uses of your home. These deductions can make a big difference to your bottom line. My Advanced Tax Tactics includes some pretty clever business home deductions that can save tax.
- Make certain that you take your deductions in the right place. If you take deductions above the line, you’ll save more money than if you take them below the line. The sad truth is that many folks do not take their deductions so they can save the most money. Not all deductions are created equal, so if you have a job, a business or investment properties, make sure you are deducting your expenses in the places where it will help you save tax.
- Be certain you file a tax return for all your business entities. I have known folks who have formed an LLC, taxed as a corporation, but never done any business. Because there was no business, they neglected the tax return. Not filing a tax return for an LLC includes a horrible penalty of $195 a month per member. When the penalties were added, it was a pretty big fine.
- Also be sure that your business and investment activities are being held in the correct legal entities. Believe it or not, you could save big on taxes this year by using the correct legal entity.
If you feel you have overpaid on your taxes, then what you do today can end up costing you more money year after year or saving you more money year after year.
While everyone must pay their taxes, you are under no obligation to over pay your taxes. It is your money so let me help you get it back!