If you want to reduce the amount of tax you pay, you should let your employer cover some of your expenses.
By simply allowing your employer to cover your expenses with pre-tax dollars, you will be able to save hundreds and sometimes even thousands of dollars annually.
The best way to save on taxes.
Make arrangements with your employer to pay for some of your expenses every month. Ask you employer to pay for an expense straight up. Any employer will do this because, a) Its a wonderful thing to do, and b) The expense will be a deductible expense which can be deducted when calculating taxes.
Assuming your income tax bracket is 25 percent and you pay a monthly rail pass of 100 dollars out of your after tax dollars. This means that your income was 133.33 dollars but 33.33 dollars was deducted as taxes before you could put your hands on it and the remaining 100 dollars is what you withdrew from the bank account for your monthly rail pass.
If you asked your employer to pay for your monthly rail pass using pretax dollars, only 100 dollars of your income will be used. This means that you will save 33.33 dollars every month or 400 dollars annually.
All you have to do to save on taxes is to identify expenses that your employer can pay for you using pretax dollars and contact human resources to see how the company can help you.
- Don’t Forget these Deductions for your 2011 Return (2009taxes.org)
- How To Save On Taxes At Work (2011taxes.org)