Taxes are among the most intimidating aspects of adult life and rightly so. If you are unaware of how to file your taxes, it can get very messy. That’s why, most of the time, you need an accountant or tax agent penrith to help you out. And with hiring help comes more costs. However, here are some tips that your tax accountant won’t tell you without charging you for consultation. These tips will help you reduce payables and help you generate hefty tax returns.
Self-Employment vs Salaried Individuals
Salaried individuals working for registered companies have income taxes deducted from their salaries. However, for self-employed individuals that is not the case. If you work as an independent contractor, the best way to prepare yourself for taxes is to save up 30% to 40% of your annual gross earnings aside for taxation purposes. That is a big chunk hence it is advisable to save up instead of waiting till the end of the fiscal year to figure your taxes out. Even if you are short on cash, it is better to file considering the penalties for non-filers is a lot heavier on the pocket than the tax itself.
Donating to charity is not just a responsible citizen’s act, but also helps you up your tax returns. If you are accounting for the donations you made, whether in cash or old belongings (assets), you get a silver lining with it. Donations and charity reduce your taxable income, therefore, reducing the amount that is payable by you.
On most public affairs related transactions, governments impose a withholding tax. That can be on your cell-phone bills or bank withdrawals for instance. Withholding taxes that you have paid can also be accounted for while filing for taxes. That brings down the tax payable by a good degree. You can get information about the withholding taxes you have paid through your service providers and banks.
Insurance and Retirement Plans
If you have insurance or contribute to your retirement plans, make sure you account for those contributions in your tax filing. These contributions also reduce the tax payable bracket, rendering lower tax cost at the end of the fiscal year.
Simple Shouldn’t Cost
If you have multiple sources of income along with investments and businesses running on the side than your tax configuration is a lot more complex than a usual tax-paying citizen. You should invest time and money in finding a suitable tax accountant to help you out with filing your taxes and developing a tax strategy. However, if you have a single stream of income with personal expenses to take care of, you shouldn’t opt to have a tax accountant help you sort your matter out. Low to moderate taxpayers ought not to go for expensive tax accountants, and rather consider free help.