Understanding about Tax DeductionsQuBY2E | July 11, 2014 | 4 | Tax Rates and Slabs
There are no means to skip or avoid tax payments but there are ways to utilize tax deductions. It is necessary to talk to your tax professional to know the ways and areas where you can look for tax deduction. Here in this blog, let us discuss where you can expect tax deductions.
Employ family members: The tax amount will depend upon the business type you are operating. If you are hiring your family members to manage your business, then you can save on tax amount. This way, you can transfer the profits or income to your family member and you can make use of compensation paid. This way, the amount of tax will be reduced in your business. For instance, if you are paying salary to spouse or wages to children below eighteen years of age it does not come under federal unemployment tax. It is essential to remain cautious since IRS can ask you any type of question.
If the IRS questions you about the compensation for the services the family member has performed, then you need to show proof of the amount you have paid to them. If you are hiring your family member who is less than eighteen years, then you need to ensure it abides to the child labor laws. It is best to consult a professional lawyer or tax officer to analyze and verify certain minor facts.
Retirement plan: If you are self employed, then it is essential to take care of your retirement needs. It is possible to take or sign up a retirement plan where your employer sponsors. It comes with variety of benefits and offers. There are several non tax and tax benefits retirement schemes in the market. You need to explore and sign up with a plan that provides the maximum tax deductions and benefits in your retirement stage.