Top 7 Ways to Minimize Your Income Taxes

Here are 7 tips that will help reduce taxes and keep more in your pocket:

1 Participate in company retirement plans. Every dollar you contribute will reduce your taxable income and thus your income taxes. Similarly, enter your company's flexible spending account. You can separate the money for medical expenses and the cost of kindergarten. This money is "use it or lose it", so make sure you estimate well!

2 Make sure you pay enough tax to avoid penalties. Uncle Sam charges interest and penalties if you fail to pay at least 90% of your current year tax or 100% from last year's tax liability.

3 Buy kuću.Hipoteka interest and a real decline, and may allow you to itemize other deductions such as property taxes and charitable donations.

4 Keep your home for at least two years. One of the best tax advantages available today is the home sale exclusion, which allows you to exclude up to $ 250,000 ($ 500,000 for joint filers) to get to sell your home from the proceeds. However, you must have owned and lived in your home for at least two years to qualify for the exclusion.

5 Time investment sales. If your income is higher than expected, sell some losers to reduce taxable income. If you will be selling a mutual fund, sell before the end of the year to avoid tax allocation in the upcoming dividend or capital gain. Also, you should set aside tax-efficient investments in taxable accounts and non-effective investments to reduce the tax you pay on interest, dividends and capital gains.

6 If you're retired, plan your retirement plan distributions carefully. If a retirement plan distribution will push you into a higher tax bracket, consider taking money from taxable investments to keep you in lower tax brackets. Also, pay attention to the 59 - ½ age limit. Withdrawals taken before this age can lead to penalties, other than income tax.

7 Bunch your expenses. Certain expenses must exceed a minimum before they can refuse (medical expenses exceed 7.5% of your adjusted gross income and miscellaneous expenses such as tax preparation fees must exceed 2% of your AGI). To deduct these expenses, you may need to bunch these types of expenses in one year to the program. To achieve this, perhaps pre-medical and miscellaneous expenses at 31 December to above the minimum.

The most important thing to be aware of tax deductions and credits that apply to you, and plan for the taxable event. And do not be afraid to ask for pomoć.Koristi from consulting an experienced tax professional far outweigh the cost to hire that professional.

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Kristine A. McKinley, CFP, CPA, and founder of Beacon Financial Advisors, teaches individuals and families how to invest and plan for retirement, college, and other financial goals. Kristine offers financial and tax planning on the hour, a fee only basis.

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