Ways to Save Money on Your Taxes
Send in next January's mortgage payment early to save on income taxes. If you make the mortgage payment in the current tax year, you can deduct the interest this year.
Make an extra payment or two on your student loan to save on income taxes. Doing this allows you to take the deduction on your taxes this year.
Pay your state taxes before December 31st. You can deduct them in the current tax year.
Pay off your doctor and dental bills. You can use these payments to increase your medical expense deduction this year.
Sell loser stocks to you can take a capital gains loss. Sell your worthless or near-worthless stock before the end of the year so that you can use the losses to offset any capital gains you might have made this year. If your loses exceed your earnings, you can deduct up to $3,000 of your losses from your ordinary taxable income.
Get a Roth IRA. The Roth IRA is the biggest tax loophole to legally avoid paying federal income taxes and you can take out and use the original contribution to fund your children’s education or borrow against it. If your Roth IRA turned out to be a real loser, you can close the account and take the loss as a miscellaneous deduction.
Don't buy mutual funds in November or December. Mutual funds make dividend and capital gain distributions most often during the last eight weeks of the year. If you buy a mutual fund at this time, you will have to pay taxes for a fund you owned for just a few weeks.
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Taxes
Lower Your Property Taxes. If you want to reduce your property taxes, consider contesting the assessment of your home's value, since most homes are overvalued. Less than half of all homeowners do this despite the fact that they are allowed to do so by law and the process isn't that difficult, and most homeowners who appeal succeed in getting their property taxes reduced. If you succeed, you might save a bundle, anywhere from $100 on a modest home to a few $1,000 on a very large home.
Some jurisdictions allow senior citizens to pay a reduced amount based on one’s income. File for a homestead exemption to reduce your property taxes by 10 to 20 percent.
How do you get started with the process of trying to get your property taxes lowered? First of all, do some research to gather evidence that your property is overvalued by the taxing authority. If your local appraisal district has a website, you might be able to research the property values of your neighbors' homes. If they don't have a website, you'll have to visit the appraisal district in person. To find your appraisal district's website, start from google.com and type in the name of your city and the term "appraisal district". For example, you can find the appraisal district in Dallas, Texas using the keywords +Dallas and +"appraisal district". Many appraisal districts have the .org extension and the term "cad" -- Example: dallascad.org.
If you find that your house has a higher value than that of your neighbors, find out why. For example, do you have more bedrooms or bathrooms? Is your home on a bigger lot? Does your home contain elements that drag down its value, such as bad drainage, bad wiring, an outdated air conditioning system? Have homes sold for less than their appraised value in your neighborhood? Have your immediate neighbors let the appearance of their homes slip dramatically? Any of these factors can help you get your tax bill reduced.
If you think your home is overvalued, contact the appraisal district and tell them you want to challenge your home's valuation. They will mail you the forms to do so. Be aware that there is a deadline involved and you only have a certain amount of time to contest your home's valuation after you receive your annual tax bill. Don't contact the appraisal district if you don't have proof. Of course, there is always the chance the appraisal district might disagree with you and, in fact, think your house is undervalued. For example, you wouldn't want to let them know that you have added a fourth bedroom or redone your kitchen, as these are factors that would raise your home's value.
How easy is it to get your property taxes reduced? One woman told us that she read this article and immediately challenged the assessment of her home on the grounds that two of her neighbors directly across the street had let their homes fall into such a sad state of disrepair that she could not sell her home for its appraised value. The appraisal district mailed her a form which she completed and mailed back to them. Within a few days, the appraisal district sent an investigator out to look at the situation and he agreed with her. The result was that her $816 tax bill was reduced to $516 with less than an hour's worth of work on her part.
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