Most people don’t enjoy paying taxes but still this is something that you have to get over with. It may not be fun, but it certainly is something that will make your state take better care of you. So, we have a few tax tips that can help you with the minimization of your tax payment.
- Home Based Business – If you have a home based business and you are the only owner of the house then you can set aside the amount that is used to cover the operations of the house such as utility bills, mortgage, maintenance charges and property taxes. The amount you can write off will be the portion of the home office of your entire house. For example, if your home office covers 20% of your house then you can omit 20% of the operational costs from the total tax payments. Here is a nice article from Turbotax for tax tips about people who work from home.
- Get Paid In Dividends – You will have to give less tax on dividends as compared to your salary but this rule differs from state to state. Consult your chartered accountant and find out which scenario will be more preferable for you. If dividends are causing you less tax then ask your employer to pay in terms of dividends.
- Vehicle Tax Tip – If your vehicle is owned by your employer, ask them to give you a tax free automobile allowance when you are driving for business purposes. Again you need to consult with your chartered accountant to find out the tax scenario of your state. Do not make any hasty decisions. Take your time!
- Split Your Salary – If your spouse or legal partner is working for you and you are paying them a certain salary amount, then definitely they will have to pay less tax on their salary; plus, your tax amount will reduce too as compared to when you are not paying the salary. Split income will decrease the tax burden on both partners.
- Relocation Tax Tip – If you are relocating your house due to a job or changing your job and moving more than 50 miles away from your former residence then you get the chance to eliminate moving charges from the total tax payment.
- Shareholders Loan – If a corporation owes you some debt, then you can convince them to pay you back your loan tax free. This tax tip is only applicable to shareholder loans because these loans are a result of the initial capital endowed by the business owner; therefore, you get to have a tax relaxation on that amount.
- Re-Furnishing Tax Tip – When you are refurnishing your home by adding new appliances, equipment or just remodeling, you get the chance to deduct the fees of these items from your tax payments. Ask your tax advisor to deduct the charges of the refurnished items.
Make sure you are making your hard earned money legal and clean by paying taxes. Moreover, if you don’t pay them now, you will only land yourself in tax debt and ultimately you will be forced to pay a bigger amount. So, do it right the first time!
This article is written by Ben Smith, a tax advisor and business consultant. He recently published an article about double tax treaties in Cyprus. A subject which many international business need to know about in case they need to pay less taxes.