In 2019, Americans paid an ungodly $5.2 trillion in taxes, representing 29% of the country’s revenue.
To quote the great scientist, ambassador, and political philosopher Benjamin Franklin, “in this world, nothing can be certain except death and taxes.”
Uncle Sam seems to always have his hands in your pocket. So if you’re looking for ways to reduce taxes, you can rest easy because there are solutions.
And in this article, we will explore a few of them.
1. Claim Business Deductions on a Side Hustle
If you’re self-employed, you may be eligible for certain tax deductions. This entails that the freelance work you do or any other entrepreneurial endeavors you’re exploring can provide you with some substantial tax savings!
You could write off business-associated gas mileage for your vehicle, marketing, website expenses, a certain amount of internet fees utilized for your business, as well as any other costs to operate your company.
Becoming an entrepreneur is one of the best tax saving strategies!
2. Fund Your Retirement Account
One of the best ways to reduce taxes is to contribute to a retirement account. Fundings to a 401(k) or IRA account can be taken from your taxable revenue.
Consequently, this will reduce the amount you owe come tax season. Moreover, as time passes, these contributions will accumulate and grow tax-free until the day you retire.
3. Begin Investing in Municipal Bonds
Purchasing a municipal bond pretty much entails loaning capital to a state, institution, or governing body for a certain amount of payments over a specific period of time. This is one of the ways to reduce tax that you should really know about.
When the bond hits the maturity date, the total number of the initial investment is reimbursed (in full) to the purchaser.
The interest gained on the municipal bond is sheltered from federal tax. And based on where you reside, that accumulated interest may also be excluded on the local as well as state level too.
4. Charitable Donations
If you’re looking for the best way to reduce your taxes, charitable donations are chief among them. These contributions (cash, checks, food, clothing donations, etc) are all deductible.
It may not seem as though it’s one of the promising ways to reduce tax liabilities, but they accumulate over time.
Charitable donations are a tried and true method for minimizing your tax bill. And truthfully, when it comes to this topic, you want every advantage you can get to enhance your wealthability.
Furthermore, donating money is not the only way to give.
You could donate books, games, toys, and anything else you can think of to organizations and nonprofits.
Finding the Best Ways to Reduce Taxes
There are countless ways to reduce taxes; way more than you could fit into a single article. These are just a few to help you get the gears turning and hopefully get you moving in the right direction.
If you found this article of value, please feel free to take a look at some of our other posts in the Business & Finance section.