February 07 2011 • by Andrea Rodrigues • Retirement
Today’s money tip offers ideas to lower your personal taxes. There are steps you can take to restructure your tax rate that will help better your financial picture. Typically, anything that maximizes your deductions and tax credits or reduces your taxable income will lower your taxes. Things like maxing out your 401K contributions or boosting the amount you put into a flexible spending account will help. If you are paying off student loans, use the interest payments to your advantage…the new American Opportunity credit increases the maximum credit you can take for interest payments on qualified student loans from $1,800 to $2,500. The IRS also rewards you for donating to a charity. Any financial contribution you make toward a charity is tax deductible. There are guidelines to this so check with your tax professional. Did you know you can deduct medical expenses? You are able to deduct costs that, in total, exceed 7.5% of your adjusted gross income. Taxes are complicated, and all situations are different, so talk to a tax professional if you have any questions.