by A.W. Berry

Created on: February 10, 2009   Last Updated: February 24, 2009

There are several ways to save taxes in any given fiscal year. The earlier in the year one starts thinking and preparing about taxes, the more options one has to save on taxes. Lowering taxes can be achieved in every income bracket level with the right tax savings awareness and strategy. This article will demonstrate some of the possible steps that may lead to lower taxes in terms of 1) tax information, 2) common tax strategies, 3) lowering adjusted gross income, and 4) other non-income tax techniques.

SECTION I: TAX INFORMATION

A good first step in saving on taxes is to have access to the right information. To gather the right information it can first be a good idea to estimate adjusted gross income, deductions and any credits one has in the case of 1040's, the standard U.S. Individual tax form. From there, one can determine what tax bracket one is in, for example 15%.

Tax information can be obtained from a number of sources including the U.S. Internal Revenue Service, county tax offices, tax accountants, financial advisors, tax attorneys etc. The difference between tax information and tax advice is that advice must be obtained specifically from certified and/or licensed tax professionals. The more pertinent information one has in regard to saving money on taxes the better because then one can apply that information to a tax saving strategy.

SECTION II: COMMON TAX SAVING STRATEGIES

There are several ways taxes can be saved either through a strategy, or tax savings tactics, or both. Tax strategy involves a long term tax saving plan such as annual contributions to either tax exempt or tax deferred retirement savings vehicles such as Individual Retirement Accounts (IRA's) and life insurance policies with retirement annuities built in.

In the short run, other tax methods that are commonly used are deductions in excess of one's qualifying standard deduction. In other words, if a tax filer can itemize deduction on Schedule A that are higher than the standard deduction, it has more tax savings than using the standard deduction. Items that are deductible on IRS Schedule A include mortgage interest paid, paid taxes, job expenses, charitable donations and miscellaneous expenses. (IRS Schedule A

Additional tax reductions that can be taken along with either the standard or itemized deductions include exemptions, education credits, child credits, foreign tax credits and savings credits, self-employment tax deduction, tuition deduction and student loan interest paid deduction.

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