Count Your Taxes

Government systems are setup in such a way that they get your tax revenue and you rarely see the  impact of that taxation on your income. Your phone bills have taxes included. Your income taxes are taken out before you get your paycheck. Sales tax is a part of many financial transactions. For many people, escrow accumulates the property taxes that you might owe. Because you generally don't have to make a special effort to pay your taxes, you may not realize just how much you do pay each year.

The American Institute of CPAs (AICPA) has a site that will help you estimate the amount of taxes you pay each year. Given your tax return information and amounts from some of your monthly bills, Total Tax Insights can estimate your taxes based on the state and county in which you live.

In addition to becoming aware of what taxes you pay, this might be a good time to plan ahead. By keeping good records and being aware of what items are tax deductible, you can lower your federal income tax bill. In fact, some of these taxes may be deductible on your federal income tax return. Both property taxes and sales taxes are deductible on your itemized return. You don't even have to keep track of every receipt to deduct sales taxes either. Sales taxes can be based on your income. Additional sales tax paid on major purchases, such as an automobiles, can be added to your sales tax deduction.

Also, as you consider life events look into the possibility of tax consequences and tax benefits. Education is becoming a major area where you can deduct expenses or receive credit for education expenses. Some types of investments may also be nontaxable. As this website should show, taxes are a big part of your life. The more you know about what leads to those tax liabilities the more you can control how big a part taxes do play. Your tax preparer can prepare your tax returns, but a tax preparer who has your interests in mind may be able to help you lower your taxes in future years.

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