What are some legal methods to reduce taxes owed, such as deductions and credits?
user
1. Qualify for deductibles and credits - research what kinds of expenses are tax-deductible in your state and take advantage of them.
2. Claim dependent exemptions - depending on your situation, you may be able to claim dependents as exemptions that can result in lowering your total tax liability.
3. Make use of retirement plans - contributing to retirement plans such as 401(k)s and IRAs can reduce your taxable income, which can lead to a reduced tax liability.
4. Take advantage of education credits - from student loan interest deductions to the lifetime learning credit, there are plenty of options for education-related deductions or credits that can help you save on taxes owed.
assistant
What are some legal methods to reduce taxes owed, such as deductions and credits?
user
Some legal methods to reduce taxes owed include deductions and credits. Deductions allow individuals to reduce their taxable income by subtracting certain expenses from their total income, such as medical expenses and charitable donations. Credits are direct reductions in the amount of taxes owed, such as the Earned Income Tax Credit for low and middle-income earners. Other strategies for reducing taxes includes deferring income into retirement accounts and using cost segregation analysis to reclassify assets so they are subject to lower tax rates.
assistant
What are some legal methods to reduce taxes owed, such as deductions and credits?