How To Avoid Paying Taxes Legally
How Much Does the Average American Pay in Taxes?
The IRS released a report on how much Americans paid in federal income taxes for the 2017 filing year. According to the data, the average U.S. federal income tax rate for all income levels was 14.64%. Here’s how the figures break down:
- Top 1% of tax filers: paid an average income tax rate of 26.76%
- Lower half of tax filers: paid 15.99% on average
- The rest: paid an average rate between 16.69% and 25.92%
Qualify For Tax Credits
Many people don’t realize that a tax credit is the equivalent of free money. Tax deductions reduce the amount of taxable income you can claim, and tax credits reduce the tax you owe and, in many cases, result in a nice refund.The IRS offers a large number of tax credits that encompass everything from buying energy-efficient products for your home to health insurance premium payments to being in a low- to moderate-income household.
- Education credits
- Family tax credits
- Healthcare credits
- Homeownership and real estate credits
- Income and savings credits
Take Itemized Deductions
Most people take the standard deduction available to them when filing taxes to avoid providing proof of all of the purchases they’ve made throughout the year. Besides, itemized deductions often don’t add up to more than the standard deduction.
Enroll In College
One way to take advantage of tax deductions or credits is to enroll in college. The government currently offers credits and deductions — you usually have to take one or the other — to go back to school online or in your community
Is It Possible To Pay Nothing in Taxes?
A tax deduction works by lowering your taxable income, so you pay less in taxes. If you want to avoid paying taxes, you’ll need to make your tax deductions equal to or greater than your income. For example, using the case where the IRS interactive tax assistant calculated a standard tax deduction of $24,400 if you and your spouse earned $24,000 that tax year, you will pay nothing in taxes. Remember this refers to federal taxes — you may be subject to local and state taxes.
An iPhone as a Medical Expense
After suffering severe brain injuries stemming from a car accident, one taxpayer was actually prescribed an iPhone by her doctor. The phone allowed her to be more independent — it reminded her of things she needed to do and answered questions for her via Siri — so it was able to qualify as a medical expense,
Leave A Comment
You must be logged in to post a comment.