Tyler Nakashima 12/10/2015 8:03:41 PMUnit 5 Discussion The first and most important way to…

Tyler Nakashima 12/10/2015 8:03:41 PMUnit 5 Discussion
The first and most important way to reduce your income taxes that I came across was to contribute to a retirement account. Your contributions are pretax. Also, with the right account, all of your interest earned is tax free until you draw upon it in your retirement. 

The next good method to reduce income taxes is to contribute to a health savings account. These contributions are similar to retirement contributions in that they are coming out of your net pay and interest earned is tax free. The draw back to this is that you can only draw upon this account for medical expenses. However, when drawing money for medical expenses, the withdrawal is tax free as well.

The third method is to combine a vacation with a business trip. This is a really good way to reduce taxes because its a business expense primarily. Also, corporate accounts generally get better prices on travel.

The third method is rather risky because you need to do as much work as the company pays for the trip. If the company you are working for thinks that you aren't doing enough work, they can easily pull that from your wages and then it would be considered taxable wages. The other two methods are great ways to decrease your taxes. The only drawback to both of them is that the money you contribute is money out of your pocket.

References

IRS. (2015, August 06). IRA Deduction Limits. Retrieved from IRS: https://www.irs.gov/Retirement-Plans/2015-IRA-Deduction-Limits-Effect-of-Modified-AGI-on-Deduction-if-You-Are-NOT-Covered-by-a-Retirement-Plan-at-Work

U.S. News. (2015, july 6). 16 legal secrets to reducing your taxes. Retrieved from U.S. News: http://money.usnews.com/money/blogs/the-smarter-mutual-fund-investor/2014/03/11/17-legal-secrets-to-reducing-your-taxes

U.S. News. (2015, May 18). The Tripple Tax Benefit of Health Savings Accounts. Retrieved from U.S. News: http://money.usnews.com/money/personal-finance/mutual-funds/articles/2015/05/18/the-triple-tax-benefit-of-health-savings-accountsReferences

IRS. (2015, August 06). IRA Deduction Limits. Retrieved from IRS: https://www.irs.gov/Retirement-Plans/2015-IRA-Deduction-Limits-Effect-of-Modified-AGI-on-Deduction-if-You-Are-NOT-Covered-by-a-Retirement-Plan-at-Work

U.S. News. (2015, july 6). 16 legal secrets to reducing your taxes. Retrieved from U.S. News: http://money.usnews.com/money/blogs/the-smarter-mutual-fund-investor/2014/03/11/17-legal-secrets-to-reducing-your-taxes

U.S. News. (2015, May 18). The Tripple Tax Benefit of Health Savings Accounts. Retrieved from U.S. News: http://money.usnews.com/money/personal-finance/mutual-funds/articles/2015/05/18/the-triple-tax-benefit-of-health-savings-accountsPosted: 4 years agoDue: 10/12/2015Budget: $10

Looking for a similar assignment? Get 15% discount on your first order with us
Our experts will take care of your task no matter the deadline!
Use the following coupon
"SAVE15"

Order Now