1. Money

Lower Your Taxes

By

Everyone would like to spend less on taxes. Fortunately, the tax laws make it easy. You can reduce your taxable income through various deductions, or reduce your tax liability through various credits. Here's some suggestions for uncovering the tax breaks that are right for you.
  1. Tax Basics
  2. Filing Status
  3. Dependents
  4. Investing and Taxes
  5. Popular Tax Breaks

Tax Basics

Understanding how the tax system works is the first key to lowering your taxes.

Filing Status

Choosing the right filing status impacts your tax rates, standard deduction, and various limits on tax deductions. Choosing the best filing status can go a long way to making sure you are paying the right amount of tax.

Dependents

Who can you claim as a dependent on your tax return? The answer may surprise you. Congress changed the law regarding dependents in 2005, causing confusion for taxpayers and professionals alike. Being able to claim a dependent will help lower your taxes by increasing your personal exemptions and qualifying you for various child-related tax credits.

Investing and Taxes

Taxpayers who invest in stocks, bonds, mutual funds, or real estate can benefit from the lower tax rate on long-term gains. Homeowners in particular can exclude up to half a million dollars in profits when they sell their primary residence. By shifting investment income to long-term gain, you can lower your taxes significantly.

Popular Tax Breaks

Some of life's bigger expenses can help lower your taxes. Here's a list of common expenses can will help qualify you for a deduction or tax credit.

©2014 About.com. All rights reserved.