How to reduce income taxes

How to reduce income taxes?

There are many ways to reduce income taxes.

Claiming as many tax deductions as possible

The first thing to do is to try to reduce the taxable income amount by claiming as many tax deductions as possible. The more tax deductions you claim from the IRS, the lower the taxable income you have for the IRS to tax you.

You can either take standard tax deductions or itemized tax deductions. Most taxpayers calculate their tax liability using both standard tax deductions and itemized tax deductions and claim whichever gives them the most tax deductions. Usually if you have a mortgage interest and other large item tax deductions, taking itemized tax deductions reduces income taxes more than standard deductions.

 

Claiming as many tax credits as possible

Another way to reduce income taxes is to claim as many tax credits as you are allowed to. There are two types of tax credits; refundable tax credits (the best) and nonrefundable tax credits. Common tax credits are:

• earned income tax credits,
• child tax credit,
• child and dependent care tax credits,
• education tax credits and
• elderly and the disabled tax credits.