Taxes are a necessary part of life, but they can also be a burden. Fortunately, there are ways to reduce your tax liability and minimize the amount you owe each year. Today we’ll discuss how reducing your tax liability can improve your overall quality of life, as well as some strategies you can use to minimize what you owe when it comes time to file.
Marriage and Taxes
ne way to reduce your tax liability is to get married. By filing jointly with your spouse, you may be able to take advantage of certain deductions and credits that aren’t available if you file as an individual. This strategy works best when both spouses have income, as the joint filing status can increase the standard deduction and reduce the amount of taxes owed.
Property Ownership
Another way to reduce your tax liability is to become a property owner. As long as all requirements are met, homeowners may qualify for mortgage interest deductions which lower their taxable income substantially. Additionally, those owning rental properties may be eligible for deductions related to repairs and maintenance expenses incurred throughout the year.
Tax Credits
In addition to deductions, taxpayers can also take advantage of certain tax credits which directly decrease their total tax bill instead of just reducing taxable income like deductions do. For example, if you made energy-efficient upgrades on your home or purchased electric vehicles in 2020, then you might qualify for certain federal energy-related tax credits worth up to $7,500 per vehicle.
Reducing your tax liability can make a huge difference in terms of improving your overall quality of life. By taking advantage of various deductions and credits available to taxpayers such as marriage or property ownership benefits and federal energy-related credits, you can significantly reduce what you owe come filing time—leaving more money in your pocket for other things! If you’re looking for further guidance on how to minimize what you owe in taxes this year or every year going forward, consider consulting with an experienced CPA who specializes in helping small business owners maximize their returns while minimizing their liabilities!
