How I Saved Over $1000 On My Taxes!
With tax day just around the corner, I wanted to share a few tax strategies that saved us over $1000.
1. Every year we try to put away a certain amount of money in long term savings. This year, instead of keeping this money in our bank account, we funded a traditional IRA. Because money put into an IRA is not taxable until withdrawal after the age of 59 and 1/2, we reduced our taxable income by $600.
2. Another benefit of funding the IRA this year, is a tax credit of varying percentages dependent upon your total income, on up to $4000 of an IRA contribution by a married couple. See this article for more details. For us, it means a tax credit, or savings, of $400, calculated at 10% of our $4000 IRA contribution.
3. There is a new deduction available for homeowners who do not itemize their deductions. You can take up to $1,000 as a deduction for real estate taxes paid on your residence, so long as you paid at least that much in taxes. Actually, the $1,000 limit is for couples; the limit being $500.00 for single taxpayers. This means about another $150 in tax savings for us, resulting in total savings of about $1,150.
Naturally, this information tells you what has been of benefit to us. It is not intended to be legal advice, or to be relied upon as such. Check things out carefully for yourself or hire the services of a qualified professional if you have any questions.
I hope this is helpful! If you have any other tax cutting tips, I’d love to hear them!
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