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Tags: finance, tax relief, tax credits
 Is paying your income tax liability becoming a burden? If the answer is yes, then find a way to lessen your liability. You can’t just say, “I’m not paying the government even a single cent.” You can’t do that for it is your obligation to pay taxes. As a citizen of the state, you are compelled to pay what you owe to the government.
It’s not only you who is suffering from the same situation. There are still many taxpayers out there who can’t pay their tax liabilities. What you are going to do is to lower the amount of your taxes. If you can just lessen your liability, you can save a lot of money.
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With the prices of goods and services increasing, you need to save even a dollar. Money is a vital commodity in order to survive in today’s world. To lower the taxes you are paying to the government, might as well understand the concept of tax credits. If you’re the one preparing and filing your taxes, you’re probably very familiar with tax deductions and exemptions.
In computing for the amount in your return, you are lowering down your gross taxable income by subtracting allowable deductions and exemptions. However, the effect of deductions and exemptions is not directly on the amount due. On the other hand, tax credits can be a great way of lessening your taxes.
For a clear illustration, you might as well see this. For example, you have a gross taxable income of $65,000 and you have deductions and exemptions for a total of $30,000. From the figures, your net taxable income would be $35,000. Let’s just assume the amount you owe to the government is $9,000.
If you won’t be claiming any credits, you’ll be paying the whole amount. But in case, you can claim any credit, it can even be lowered. Assuming again you have $3,000 of allowable tax credits, the actual amount you owe to the government will then be $5,000 only by subtracting $3,000 from $9,000.
That’s the best thing about employing credits in your return. A dollar to dollar subtraction is made on the amount you owe. Savings is really possible and you can apply the money to your other obligations. If you have an outstanding loan or bills, the money you saved from taxes can be a big help.
You must be familiar with these things so you’ll know whether you are eligible to claim or not. It is advisable to ask the taxing authority for the allowable tax credits. Or you can seek the help of a tax attorney or someone expert in the field. The common credits are tax credits from retirement savings.
However, there are certain criteria in order to claim a credit. The government is now offering it to single taxpayers with earnings of less than $25,000. If you’re declaring as husband or wife, then the earnings must be less than $50,000. So you must claim credits to pay a much lower liability and make payment easier on your finances.
About the author
The author of this article Rick Goldfeller is a successful underground Financial Analyst who has been advising and coaching individuals for many years. Rick recently published a book on how to manage your money and attract Wealth and Financial Freedom. More info on his Finance Planning course is available HERE.
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