How to reduce your taxable income in 2017? Is there a way to do it legitimately, while making sure that you don’t get selected for an audit by the IRS? Yes, certainly. Let’s see how.
1: Open an IRA
The best way to reduce your tax burden is to make a contribution to the IRA before April 18, 2017. You can contribute up to $5,000 if you are under 50 years of age or up to $6,500 if you are 50 and above. If you are married, your spouse can make a contribution as well. You will get a tax deduction on your investment in the IRA, which is a great way to reduce your taxable income.
2: Deduct any employee business expenses that remain un-reimbursed.
If you have any expenses related to your employment that are not reimbursed by your employer, you can now get a deduction on them for tax purposes. This is an obvious way to reduce your taxable income, but make sure you have all the receipts and bills with you as you sit down to prepare your tax returns.
3: Claim deductions on any non-cash charitable contributions.
You have probably made a number of donations to charities such as clothing, electronics, and so on. Now, if you have donated more than $250 worth goods to a charity, you can now claim a tax deduction for it, as long as you get an official letter of acknowledgement from the charity. There are many who give non-cash donations worth thousands of dollars. There is no reason why you shouldn’t take advantage of this by claiming a tax deduction.
4: Claim deductions on real estate taxes on residential property.
You probably know that you can claim deductions on your primary residence. Did you know that you can deduct taxes on your second home or non-primary residences as well? Yes, this is a little known fact which you can use to your advantage.
5: Claim deductions on any losing investments.
Did you sell any shares or mutual funds at a loss? Now, if your losses are more than your gains, you can get a deduction of up to $3,000 against the loss, and carry over the balance to future years. This is a great way to reduce your taxable income.
6: Start a health savings account.
A health savings account is like an IRA but for medical expenses. You can contribute up to $3,350 to it, before the tax deadline. You should also have a deductible health insurance plan. This way you can get the maximum tax deduction from your medical expenses. This can help you a lot during a medical emergency, when you could do with any tax savings you can get.
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