what are legal ways to reduce federal taxes on my paychecks?

Question

The amount of federal taxes taken out from every paycheck isjust outrageous. Is there anything I can possible do to lower that amount? Claim more exemptions and then write off expenses at year end? Donate more to charity? etc.

Answer 1

Claiming more exemptions will lower what they take out; but at the end of the year, your taxable income won't be reduced; you'll just have less paid in advance against the balance due.

Answer 2

How much of a refund are you typically getting at the end of the year? If you're getting a couple hundred $$$ or less, there's probably not a lot you can do; your withholdings are just about right. If you adjust them you'll have a large tax bill when you file next year, possibly with penalties for underpayment of your taxes.

If you're getting a large refund, just bump the number of withholding exemptions to reduce the bite on payday. Use the worksheets on page 2 of Form W-4 to best estimate your withholding exemptions.

Spending money (charity, mortgage interest, etc.) just to get a tax break is NEVER a smart idea. The maximum benefit for every dollar spent is 35 cents and only the wealthy see that much. Most taxpayers will only see 15 or 25 cents of that back.

Answer 3

Do you have access to a 401k or 403b at work? If so, contribute to that. The money comes out of your paycheck before taxes. That lowers the total amount of taxes you pay. Plus, the money you put in the account will grow tax free until you retire. 59 and a half is the minimum age to take money out of the account without getting hit with fees. Of course, when you do take money out it will be taxed, but since it grew tax free, there should be a lot of it.

Some may tell you to get a mortgage to reduce your taxes. It is true you can deduct interest from a home mortgage, but you still have to pay the interest so you are still paying money. Getting a mortgage just for tax benefit is not a good idea.

Answer 4

If your looking for more of your own money in your pocket at the end of the week instead of the governments. What you can do is specify what percentage of federal taxes you want with held each check for example I am single and have no children so I have 21% pulled each check.Before I did this it was like 26% . I also use a program called deduction pro from tax cut when I do my taxes Used properly it can help boost yoour return legally.

Answer 5

You will need pre-tax deductions to lower your taxable income for federal income tax (FIT). See what ones your company offers and sign up. *smile* Some common examples are health insurance premiums, flexible spending accounts (for health care and dependant care expenses), and retirement plans. These contributions will lower the taxable income on your W-2 and you'll owe less tax. You can also contribute to a education spending plan for yourself or another person. I use Michigans 529 plan to lower my state income tax *and* pay for school. Good luck.

Answer 6

the place do you get your counsel that only a million/3 of the Federal gross sales comes from income taxes? that's on no account real in any respect. For FY07: man or woman income taxes: 40 5.3% company income taxes: 14.4% Social taxes (FICA & FUTA): 33.9% Excise taxes: 2.5% different taxes (present, assets, and Customs): 3.9% in case you propose to drop the income tax you are going to would desire to replace it with another tax that will boost in reality an identical sales. And in case you desire to avert super social turmoil and fall down of the economic equipment you are going to would desire to collect quantities from each taxpayer that are resembling what they're paying ultimate now. you will additionally would desire to heavily jack the minimum salary -- probable by using a hundred% -- to swap the lost paying for ability of the working poor with the shortcoming of the Earned income credit. only repealing the sixteenth substitute won't inevitably influence the income tax. The SC determination that invalidated income taxes interior the previous due 1800s would probably be reversed upon revisit by using a famous preferrred courtroom in plenty an identical way as Brown v Board of preparation reversed Plessy v Ferguson. And please do no longer waste our time with rants relating to the so-referred to as "honest Tax" that's little extra advantageous than a huge money grab for the wealthy that could trash an already fragile economic equipment. Few human beings have a spare $6,000 mendacity around to pay the tax on a sparkling $20,000 motor vehicle or perhaps fewer have a spare $60,000 for the tax on a sparkling $two hundred,000 domicile.

Answer 7

How To Lower My Taxes

Answer 8

Make less money and less taxes will come out.