There is no doubt that taxes are a part of life. Many of the benefits that are enjoyed in this country are the result of some tax being paid somewhere. While the benefits are enjoyed, no one wants to pay more taxes than they need to. Fortunately, there are many ways you can reduce your income taxes. Here are a few of them.
Start a Business
One of the best ways to reduce your taxes is to start a business. The IRS allows many deductions for business owners. The one stipulation is that the business must be for the purpose of making a profit. It cannot be a hobby.
Many business expenses can be deducted. They need to be directly related to the business and cannot be extravagant. You can deduct expenses for:
- Startup costs – Deduct research into starting the business (up to $5,000) and another $5,000 for organizing it.
- Rental space – If not in your own home, the cost of renting space is tax-deductible.
- Utilities – All of your utilities are tax-deductible, including your cell phone service.
- Equipment – The equipment you buy for your business is often tax-deductible. If it costs more than $200, most likely it will be depreciated over several years. Equipment that has a lifespan of less than a year is fully deductible.
- Office supplies – The materials you need and use in your office are deductible.
- Mileage – When a vehicle is used for your business, you can deduct it at the standard rate of 58 cents per mile for 2019. You will be required to keep records.
- Home Office – If you have an office in your home that is used exclusively for business – and it is your primary place of business, you can deduct the costs of it. This includes all of the above, including the share of the utilities that it uses – based on square feet.
- Meals and Entertainment – You can deduct 50% of the cost of taking clients to dinner and 80% of the cost of meals of employees when they are reimbursed for meal expenses while on the road.
Make Charitable Contributions
Contributions made to qualified charities or religious organizations can also be deducted from your income. The stipulation is that only amounts above $7,000 will apply. You can also donate items and get receipts for their value.
Contribute to Retirement Accounts
Retirement accounts such as IRAs and 401(k)s let you deduct the amount of money you contribute from your taxes. Taxes are paid at a reduced rate on the amount withdrawn if you get the money after you retire. There is a limit on how much you can pay annually that can be deducted. If you are 49 or younger, you can contribute up to $6,000 annually in 2019. For those who are 50 or older, you can add another $1,000 per year.
If you are looking for ways to reduce your taxes, you can talk to the staff at Taxfyle.com. They have many tax experts available that can show you many ways to pay less at tax time. Contact them today for more information and to get help on your tax forms.
Image Source: Pexels.com