Most salaried employees have listed funds in their hands. Even when your pay is good, you have several expenses to be met, and after you have paid all your dues, you are left with a certain amount. If you keep paying your taxes at the last minute without planning them, you will pay a significant amount of your savings. However, a little planning goes a long way in tax reduction. All you need to do is make a little effort; just like you plan your finances, you must also include tax planning as a conscious practice.
If you are someone who struggles with money management or understands tax reduction and management, you must contact an accountant from Tax Resolution for businesses in San Mateo, CA, who will help you in managing your income tax and other liabilities.
Tax planning tips that are beneficial for salaried employees
- Claim your tax deduction
Most salaried employees have the right to claim their tax deduction at the end of the year. The government has created specific rules that enable workers and employees to reduce their tax liability using several investment options. You can use these options to save money and reduce the tax you owe to the country.
Employees’ choices include student loans, home loans, rent, mortgage, and insurance policies. Etc. However, you must talk with an accountant before investing in any resources, as they will guide you for what’s best in your position. Most of these investment options hold excellent potential for returns, so make sure you make the right choice.
- Buy health insurance.
Health insurance can help you reduce your tax liability by deducting a certain amount from your statement. The premium or installment you pay for your insurance policy is deducted from your total tax amount at the end of the year, which you can claim for a return. Additionally, you can take health insurance in any of your family member’s names, like a spouse, children, parents, etc.
- Check the allowance that your employer provides.
Some specific expenses in your life incur only because of your work. For example, traveling to your office daily, costs for client meetings or entertaining them, having an office dress code, etc. Most companies give allowance for company-related expenses to employees. However, the allowance you provided does not include your income; hence, it does not bear any tax liability.
The conveyance allowance you get from your company can be used to apply tax exemption to deduct the total amount of your income tax. Additionally, people who are less blessed or physically challenged can get a greater amount of tax exemption.