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Reduce Your Taxes Forever
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I just found out today from a comment at one of Blueprint’s article that you can deduct state taxes from your federal taxes! I just don’t think this make sense because that makes the state tax useless as the governments should figure this out amongst themselves.
Without getting into a debate on that though, I want to ask everyone whether they knew this or not. This is probably written somewhere in those thick booklets that has all those tax forms, but who understands and keeps up with all the tax laws? Everyone knows the general rules, but I bet we miss out on many of the possible ways to deduct our taxes because we just didn’t know it could be done. Here are a couple of ways that can help us in this regard.
Tax advisors – They seem a little expensive because they charge quite a bit to do your tax. However, they have the potential to help you save more money than they charge because they know all the tax rules and changes and can get you the maximum tax benefits.
Tax software – This started getting very popular the last couple of years. The software would ask you questions which you answer and the forms will be printed out for you to file. It is easy and will probably help you save some money as long as you explore everything that the tax software offers because some money saving tax forms could be buried inside the menus.
Media – Tax laws are mentioned anywhere at anytime (like this article in the middle of October). As long as you keep your eyes out and don’t mind learning, you will pick up all kinds of tips to help you reduce your taxes.
Is there anything else you can think of to help us keep up with the tax laws without reading those booklets? Please share so we can learn about your secrets!
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Around the PF Blogosphere: October 11, 2007 | The Sun’s Financial Diary | A Personal Finance Blog on Saving and Investing on October 11th, 2007 at 7:46 pm Says:
[...] Ning gave some suggestions on how to reduce your taxes forever. I do my own taxes and, yes, a tax software is a must to keep up with changes in tax laws. And I [...]
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Welcome to Carnival of Personal Finance #122 at Mighty Bargain Hunter on October 15th, 2007 at 7:20 am Says:
[...] Ning has a worthwhile endeavor: Save tons of green! Cut your taxes forever! After Grad talks on a topic I’ve known; Funding is bait so you might need a [...]
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Free Tax Guide on October 28th, 2007 at 1:12 am Says:
online taxes…
Great blog! Everything You Always Wanted to Know about Taxes… at http://taxhandling.com/taxes/...
Yes, this is not new. Although, it can only be done if you ITEMIZE your expenses using a Schedule A. Most times, this means you own a home paying mortgage interest and property taxes. Then the rule applies, otherwise it’s a way with the Standard Deduction. Your still getting it, but your actually receiving more with the deduction, then your actual costs.
D: I see. I don’t have a house yet but I also heard you can actually deduct your sales tax too. Maybe I should save my receipts from now on.
Hi Moneyning, I know a friend from work that constantly attend the Tax courses from time to time! I actually don’t need to attend the classes. All I do is call her to get the updates! : )
Emily: Maybe your friend can do your taxes for you too since you might not know what to ask her!
The tax laws are constantly being updated. I keep my eyes and ears open by reading the business section, blogs, etc. In the end, I pay a few dollars for turbotax. The investment is worth it in time saved and deductions found and used.
I paid $250 to take H&R Block’s tax course. At the time I did it because you can transition easily from that to a job at H&R Block (I was unemployed then), but it was some of the best money I ever spent. It goes pretty deep into detail (amortization, business assets, etc, etc) but it’s enough for me to file my own taxes every year and feel pretty comfortable with it. (I also use their software, TaxCut).
Tax rules and regulations are changing day by day, one should know about these things carefully. And it is good to look after the things, you wrote in the article. Thank you for sharing.
Patrick: Not to mention that the time it saved you.
Lise: H&R’s tactic is amazing. They charge you for learning something to do their job which also helps promote their product since their teaching philosophies are for sure embedded into their tax software! What a great idea!
USA: It’s extremely hard to keep up. At least the software does most of the work for us now. I can’t imagine the old days where everyone has to fill out everything by hand.
MoneyNing,
If you itemize your deductions you can choose to deduct your state taxes OR your sales taxes, not both. I think they do this for the few states without state tax, since in California the state tax is high.
One thing to remember is that you have to declare whatever refund you get from your state taxes in your federal income for the next year, since you didn’t pay tax on that money yet.
I still do my own taxes by hand (and I’m a homeowner). It saves me the money of buying a software or a tax accountant… and is not really all that hard, unless you do a lot of trades in your investments.
which also helps promote their product since their teaching philosophies are for sure embedded into their tax software! What a great idea!
Actually, it’s not. We learned to do everything out by hand–I just use TaxCut today because I got a copy of it free in Money Magazine. I’ll agree that their offering the course is somewhat mercenary, in that its main purpose is to get more employees in there, but it’s a lot cheaper to take their course once then to take your taxes to them everywhere.
Carl: Last year I had too many trades (probably not a good thing) but this year should be better so I will think about doing it myself. Thanks for letting me know about the “either or” thing about state and sales taxes though. I seem to learn something new everyday
Lise: Yup good choice! I’m glad that you were able to save money by investing some of your time and money.