How to Reduce the Amount You Owe to the IRS
Tax bills can put a dent in the most carefully followed budget. There are several steps that can be taken to reduce the amount you owe the Internal Revenue Service. Carefully preparing your tax returns and taking every deduction possible reduces your net income, which in turn reduces the amount of taxes you owe.
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Instructions
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Take all deductions allowed. Many people don't know they can deduct sales tax paid on a vehicle that year. They can also deduct mileage anytime they use their personal vehicles to travel from work to meetings, work- related errands or any other work-related need as long as the company is not paying you the mileage.
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Give to charity. The value of items donated to nonprofit organizations, cash gifts and in kind services are all deductible at the end of the year. Be sure to request value receipts from the organizations that you donate to so you will have them to add up at tax time.
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Claim dependents. In addition to yourself you are allowed to claim certain dependents if you provided more than 50 percent of their support during the tax year. If you are divorced, make sure your divorce agreement allows you to deduct your children during at least 50 percent of the years they are growing up. Remember to deduct any disabled relatives for which you provided more than half of their support.
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Subtract any reinvestment dividends throughout the year. Though it is not considered a deduction, it reduces your income and can save you a significant amount of money at tax time.
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Keep track of your travel expenses when you go to your reservist military duties. They are deductible if you had to travel more than 100 miles.
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Tips & Warnings
Maintain a file system to keep track of receipts, charity donations, mileage records throughout the year to make them easier to locate and add up during tax return preparation.
Mileage incurred to travel to and from work is not deductible.
