5 Tips to Help You Pay Less Taxes This Year

One of the busiest times of the year, except for the Holidays is, the tax season. And every year, each tax institution reminds us to file smart and on time. Nowadays, some people prefer to do their own taxes, while others seek advice from professional, reliable and skilled tax companies.

Knowing what to do and how to do it is very important. I suggest doing your homework for your advantage. First thing is to learn and understand the current or updated tax procedures. This way, you know what you're getting and expecting. Not only that, but a little advance planning will almost always help you reduce the taxes you owe come tax season. There a bunch of tips that you can use come year's end to help lower your taxes.

Charity Contributions. If you have some stock that you've had for more than a year, it might be a good idea to keep the cash in your pocket, and donate the stock. This way, you avoid paying tax on the appreciation of the stock. At the same time, you can deduct the full value of the stock in your taxes. A sure winner! You get to keep your money. The charity receives a considerable donation. If you liked the stock you sold and still want to maintain a position in the shares after your donation, you can always buy new shares in the company.

Plan Ahead at Work. If you have a 401(k) plan with your current company, it is a good idea to state your contributions for the next year. Analyze your spending and needs then from your pay check, set aside as much as you can. $15,500 is the deductible maximum for 2008 ($20,500 if you will be age 50 or older at the end of the year).

Maximize your Flexible Spending Account. During this time of the year is when employees must specify how much from their salary they will contribute to their medical and child-care flexible spending accounts. Withdrawals taken from these accounts for medical and dental insurance premiums, uninsured premiums, uninsured medical and dental expenses, and child-care costs are tax-free. Keep in mind that you will lose your money at the end of the year if you still have balance in your spending account. Make sure to use the remaining balance. You can use it to purchase a new pair of glasses or new set of contacts, fill prescriptions, and get your overdue dental work.

Not a lot of people know that you may claim tax loses to activities IRS may consider hobbies. Its hobbies that may bring some revenue but not enough profit every year. Examples are restoring or selling vintage cars, or breeding dogs or horses, to name a few. So for hobbies that doesn't qualify, you can't subtract overall loses, but you can report expense to balance income.

Tax season could be a very stressful time. Planning ahead and being organized is the key to help lower you taxes. If possible, keep all records, invoices, etc... for references. Good luck!

Low tax
Reduce your tax and keep the money for your family