An unpredicted income tax bill can ruin your day. So, here are some easy and effective moves you can make to cut your tax bills. 1.Contributions/Donations Charitable contributions provide a tested way to cut the tax bill. Donating towards a cause is a great feeling, but saving tax on it is a plus. There are many, NGO’S, funds and organizations listed in the Income Tax Act, contributions to which can save tax up to 50 percent or even 100 percent. 2.File Your Medical Expenses If you’ve been in the hospital, medical center or had gone through any costly medical care, then keep those bill receipts. You can deduct medical expenses that are over 7.5% of your adjusted gross income for that year. Let’s understand it by an example. Suppose your adjusted gross income is $80,000, anything beyond the first $6,000 of your medical bills, 7.5% of your Adjusted Gross Income could be deductible. 3.Interest Payment On An Educational Loan We know that higher education such as Master’s or Ph.D. is expensive and not everyone can afford it. Thus, people are forced to taking loans which come with high interest rates. But, the income tax laws do provide for a deduction of the whole interest paid regarding such an educational loan taken. You can also read: If you Don't File Your Tax Return It Can Make Big Headaches For you 4.Delay Your Receiving Income You can defer receiving income until after April 15 to avoid paying tax in the present financial year. This is because it will certainly help cut your taxable income. 5.Make Spousal Contributions Higher earning partners can minimize their tax simply by paying some of their super to their partner’s super account. Additionally, spouses can claim a tax offset of up to 18% on super aids of up to $3,000 that are made on behalf of their low-income earning spouse or non-working partner. 6.Invest In Bonds Investment bonds are ‘TAX PAID’ investments. Earnings made from a bond are excluded from your personal income because the bond provider pays tax at 30% internally, and leaving nothing to show on a tax return. You can refill the amount in the fund as long as your successive investment does not exceed 125% of the initial investment. Also, doing so activates the 125% rule which sets back the 10-year advantage to year one for the recently invested amount. Taxpayers can save thousands on taxes simply by spending a few hours every year keeping up-to-date of the tax law. You can contact USA Expat Taxes. if you want to know more about how to file us income tax return online
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