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8TH SEP 2008
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 Taking steps to reduce next year's taxes
Taxes are one of those things that everyone complains about, but all too few of us take the time, or the steps necessary, to reduce our tax burden for the coming year. The sad truth is that by the time April 15 rolls around it is too late to do anything about taxes. The time to take control of your tax situation is at the beginning of tax season, not when you sitting down with your tax form.
There are a number of important steps taxpayers can do to reduce their burden of taxes for the coming year, including:
Step #1 Start contributing to a retirement plan
If you are not currently contributing to a retirement plan, like a 401(k), 403(b) or IRA, the time to start is now. The money you contribute to a qualified retirement plan can be used to reduce your taxable income, and therefore your tax burden.
Step #2 Look into flexible savings accounts for health care expenses
For those with predictable health care expenses, a flexible savings account can be a good choice. The money contributed to these plans comes out before it is taxed, therefore reducing current taxable income. The money in the account can then be used to pay for eligible health care expenses. It is important, of course, to know the rules of the plan you choose and make sure it is really right for you.
Step #3 Contribute to a great cause
Contributing to your favorite charity is a great way to make yourself feel good while reducing your level of taxation. Those who itemize deductions on their tax returns can enjoy a great tax reduction while contributing to a good cause. If you contribute appreciated stock, you can give the charity a double gift, and yourself a gift as well. You will not have to pay taxes on the capital gain, while the charity also receives a valuable gift. If you donate hard goods, like clothing or furniture, it is important to get an itemized receipt should proof of the contribution be needed in the future.
Provided by The Student Zone (United Kingdom)
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