Ways To Save On Your Taxes [The Tax Diet Episode 1] (How To Reduce Your Taxes Fast)

5 Easy Ways To Save On Your Taxes [The Tax Diet Episode 1] (How To Reduce Your Taxes Fast) Ways to reduce taxes on social security:    • How to Reduce or Eliminate Taxes On Social...   IRS Withholdings calculator work through -    • IRS Tax Withholdings Calculator 2018 Compl...   Income tax projection worksheet:    • How To Project Taxable Income! 📈(Free 2018...   Our complete tax video playlist:    • Income Taxes Explained   This is the first video in a series of videos that will cover strategies for you to immediately begin minimize your taxes. The tax strategies mentioned in this video are very basic and common strategies, because it is designed for the average person. For now let’s start with these basic tax savings tips and as I release more videos in this series over the coming weeks and months we will climb the ladder of tax complexity for those of you have more complicated tax matters and you will learn new things about taxes along the way. 1. Tax Planning - The foundation of saving money on your taxes no matter how simple or complex your tax situation is begins with tax planning and forming a strategy. Most people would not consider this a tip, because they simply do not understand the overwhelming importance of operating from a plan or strategy for their taxes. I can tell you from experience of doing accounting and taxes now for 7 years that the #1 tax saving secret, let me say that for you one more time to make sure I made myself clear. This is the number one tax saving secret of the rich. The rich operate from a plan. The poor and middle class typically do not. When doing tax planning you will be thinking about the following: What do I expect my total income to be by the end of the year? How does the way you make a living impact your taxes? How does the way in which you invest affect your taxes? How do I minimize my taxes in retirement? When you sale your home, investments, etc affects your taxes When you plan expense affects your taxes. 2. Reduce Debt- These next two tax savings tips interact with one another and are very much related and you will see why. The first way most people can begin to reduce their taxes is by paying off most types of debt. What do I mean? Let me explain. Debt is a good example of how your finances can impact your taxes. When a person has a lot of debt they need additional income in order to service their debt payments. Generally, the more income we make the more taxes we have to pay. 3. Investing for retirement and saving on taxes. This is one of the most obvious and easiest ways to reduce your income taxes. Imagine a person who was paying a $1,000 a month in payments on their debt now becomes debt free. They then take that $1,000 a month and begin contributing that money to their 401(K). Let’s assume their income tax rate is 22%. By investing a $1,000 a month their taxable income is automatically reduced by $1,000 a month. By investing they will begin defer $222 a month in income taxes while saving for retirement at the same time. If that person lives in an income tax state such as California or New York they will avoid paying even more in tax by investing for retirement. As of 2018 each person can defer up to $18,500 in wages if under 50, or up to $24,000 in wages if over the age of 50. 4. Invest in a Roth IRA or Traditional IRA. Investing in a Roth IRA won’t save you income tax today, but can save you from paying income taxes in the future. If you are in a high tax bracket and you are closer getting nearer to retirement contributing to a traditional IRA might more sense than a Roth, because you start to receive an immediate tax deferral of up to $5,500 per year, per spouse if you qualify. This means a married couple could easily reduce their taxable income by $11,000 per year. A person over the age of 50 can contribute $6,500 per year. In this instance my wife and I chose the Roth IRA option, because it made the most sense for us in our situation. I have several videos that discuss Roth IRA rules and Roth IRA investing. Contribute to a Health Savings Account. Personally I love the health savings account. To qualify for this you have to be enrolled in a high deductible health care plan. These plans are fantastic way for us to save on taxes and build up a nice medical savings account for when medical expenses arise. The money within the ‘H S A can even be invested to help it grow faster. In 2018 the maximum ‘HSA contribution for a single individual is $3,450 and $6,900 for a married couple filing jointly. Links: https://www.fool.com/retirement/2017/... https://money.usnews.com/money/blogs/...