2007-09-13 17:12:10 · 5 answers · asked by Cervantes 1 in Business & Finance ➔ Taxes ➔ United States
What you are really asking is how can you get to keep more of your money. Deductions may save you taxes, but the total money you end up with is less. If you want to pay less taxes AND have more money, you need to get married and have a kid. That will automatically get you more exemptions on the taxes because you will have two dependents.
Buying a house will not get you more money. Lets say your mortgage interest is $10,000 per year and you are in the 25% tax bracket. Without the house, you would pay $2,500 in taxes on the $10,000. With the house, you do not have to pay the money on taxes but you still spent the money on interest, so you come out with $7,500 less money. Not to mention the principle, insurance, upkeep, gas, water, sewer, phone, and all the other stuff that goes with a house. Not to mention property taxes, which will more than make up for whatever income tax break you get.
Consider putting money into ANY savings plan. IRA for example. May not save you tax payments today, but it will when you use the money in your retirement.
Consider moving to one of the states that does not have any income tax. That will save you between 5% and 10% depending upon which income tax state you live in now.
Buy a new car that gets great gas mileage. Toyota Corolla for example. Keep it well maintained and drive it for the next 10-15 years. That will save you more money than practically anything else you can do. Cars are one of the biggest money wasters, specially if you buy a new one every 3-4 years.
2007-09-13 17:59:35 · answer #1 · answered by forgivebutdonotforget911 6 · 1⤊ 1⤋
If you are living in a state with an income tax, that sounds about right. If you are claiming 0 withholding allowances, file a new Form W-4 and change that to 1 or possibly 2. At 1 you will still be looking at a small refund at tax time. With 2 you'll be within pocket change of even money when you file, normally within $50 or so.
Your gross income is over $87,000 a year so your tax bill is going to be rather high. Not a lot you can do about that.
2007-09-14 04:22:13 · answer #2 · answered by Bostonian In MO 7 · 0⤊ 0⤋
I have many friends in this situation. You can't just increase deductions on paper, you need to actually have to make a big change in your life. Many people will buy a house and get a mortgage so the interest will decrease their taxes; however, you will pay a lot more to the bank for the loan than you will in taxes, especially if you do not need the house or really increase your house payment. You can start saving for retirement in a traditional IRA or through your work's 401K plan if they have one. You can put several thousand dollars away (up to $15000 or so in a 401K), but again, your final take home will actually decrease, since you're saving money in a retirement account and you'll not get to spend it for many years. If you just want to increase your paycheck by claiming single and 1 exemption on yor W-4, you may see an increase in your paycheck, but you'll get a big fat IRS bill next April. best bet is 401K your employer may even match your contributions bringing you an immediate 100% increase in your money!
2007-09-14 00:32:19 · answer #3 · answered by Patrick S 3 · 1⤊ 0⤋
thats a tough one. add a 401k, get dependents. etc. you need to know. you can ask your employer to increase your dependents allowance to one or more. just be careful
2007-09-14 00:28:42 · answer #4 · answered by just hanging around 5 · 0⤊ 0⤋
Ask your employer to take more out, or ask them if you can fill out a different W4.
2007-09-14 00:20:53 · answer #5 · answered by Jody 6 · 0⤊ 1⤋