#Tax deduction

[darthfoil]

"Only 1 in 4 families that qualify for any kind of housing assistance (rental assistance, public housing) receive it. The waiting list for public housing in a city like L.A. is not counted in years anymore; it is counted in decades. " "The reason that waiting list is so big, is because we haven't invested deeply in housing our poorest families. And one of the reasons we don't have enough money to go around is because we have things like the mortgage interest deduction."

Matthew Desmond on The Real Cause of Poverty with Matthew Desmond - Factually! - 215

The Mortgage Interest Deduction is a tax deduction rich people get for owning a home. It is a housing subside for the wealthy.

[millercompanyllpny]

What is a car donation #tax deduction? Learn more from our own Paul Miller, CPA in Business Insider on how to maximize your tax benefits for 2024

"Also, the deduction for non-cash donations is capped at 50% of your adjusted gross income. If you can't use the entire deduction this year, you can carry it forward for up to five years," says Paul Miller, managing partner and CPA at Miller and Company, an accounting firm with offices in Florida, New York, and Washington DC.

[finlotax]

Essential tax tips every small business owner should know to maximize savings

Tips for tax savings

1. Deferring income/expenses

As a small business owner, you can consider deferring incomes or expenses based on business conditions. If business for the year has been slow and profits are lower than expected, you can consider deferring expenses and increasing income for taxation purposes. However, such a step should only be adopted if you are anticipating higher profits during the following year. Income growth is accelerated by speeding up cash collection before December 31 while simultaneously deferring the payment of expenses till after the new year. This will result in the income received during this year being taxed at a lower rate, while the expenses carried forward to the next year can be useful to set off against the higher income of the new year. On the contrary, if profits are expected to be high this year, you can consider deferring income to the next year and increasing expenses in the current year to reduce the taxable income for the year. This can be achieved by paying some of next year’s expenses in the current year.

2. Qualified business income deduction

If your business is structured appropriately, you can claim a Qualified Business Income deduction under the Section 199A. As a small business owner, you can avail of a 20% deduction in qualified business income when calculating federal taxes. However, this deduction is applicable on “pass-throughs”, a process where the owner pays the tax on the business income rather than the business itself paying the tax. That tax break is scheduled to expire after 2025without changes from Congress, which could affect millions of filers. Consult a tax professional to know if this deduction is applicable to your business. 

3. Resourceful tax planning

If you have a fairly good idea of how your business is likely to perform during the next tax year, you can prepare for the possibility of higher taxes by creating a cash reserve that can be used to pay the IRS. This will ensure you do not face liquidity problems when it is time to pay your taxes. Another way to meet your tax liabilities for the year is to pay estimated taxes based on the tax paid during the previous year. So, if your business did not do well the previous year, you would be required to pay a relatively low amount of estimated tax for the current year which would preserve your liquidity. Ensure you pay at least 90% of the tax estimated for the current year or 100% of the tax on your return for the previous year whichever is lower, to avoid being penalized. The balance would be due at the end of the current year. These figures should be worked out with the help of your tax consultant or accountant.

4. Use your car for business purposes

Using your car for your business can have several tax benefits for your small business. Car expenses are permitted as deductions from taxable income. Deductible car expenses are calculated at a standard mileage rate of cents per mile or actual expenses are considered. Eligibility for this deduction will depend upon taxable income. 

5. Create a retirement savings plan

Creating a retirement plan secures your future and helps reduce the tax rate on your income. Individuals and businesses can contribute to a SEP IRA or 401(k)-retirement plan. Business owners can set up retirement plans for their employees and the cost of setting up and administering these plans can be claimed as a deduction.

These are just a few ways in which small businesses can reduce their tax liability and increase liquidity. These steps to reduce your tax liability can be adopted in consultation with a tax professional based on your business size and organizational structure.

Finlotax: A professional accounting and taxation firm in CA

We are Finlotax, a prominent bookkeeping, CFO and taxation firm based in CA. We take care of all your complex bookkeeping and financial needs at affordable prices. We can help you save on taxes with our tax planning and consultation services. Just reach out to us at 4088229406 and talk to our experts.

[sonalj]

Income Tax Deductions List - FY 2023-24 (AY 2024-25) | Kotak Life

What are Tax Deductions? Tax deductions are specific expenses or investments that reduce an individual’s taxable income, thus lowering the amount of income tax they are required to pay. The government allows these deductions to encourage individuals to save and invest, purchase insurance policies, and contribute to specific funds and schemes.

Income Tax Deductions on Investments Under Section 80C Investment instruments offer tax-saving opportunities under the provisions of the Income Tax Act of 1961. Every financial year, taxpayers can potentially reduce their taxable income by up to ₹1.5 lakh through deductions available under Section 80C.

Section 80C deductions apply to individuals and Hindu Undivided Families (HUFs), allowing them to claim a maximum deduction of ₹1.5 lakh from their total income. As per the latest budget reforms, individuals adhering to the old tax regime can continue to benefit from deductions amounting to ₹1.5 lakhs under Section 80C.

It Is important to note that these deduction rules do not apply if taxpayers have opted for the new tax regime.

Income Tax Deductions List in India Understanding the various deductions available under the Income Tax Act is essential for taxpayers to optimize their tax planning strategies effectively. Here is the list of income tax deductions available in India:

Income Tax Deduction under Section 80C Section 80C is one of the most popular tax-saving provisions in India. Under this section, taxpayers can claim deductions up to ₹1.5 lakhs in a financial year. Some eligible investments and expenditures under Section 80C include:

a. Employee Provident Fund (EPF)

b. Public Provident Fund (PPF)

c. Equity-Linked Savings Scheme (ELSS)

d. National Savings Certificate (NSC)

Income Tax Deduction under Section 80CCC Under Section 80CCC of the Income Tax Act, individuals can claim annual deductions of up to ₹1.5 lakh for contributions to designated pension plans offered by term life insurance companies. However, this deduction is subject to the overall limit specified under Section 80C of the Act.

[quirksphere]

Top Tax Benefits of Savings Insurance You Should Know

Savings insurance is a versatile financial product that helps you save for the future and offers significant tax benefits. Understanding these benefits can help maximize your investment and optimize your financial planning. This article aims to provide a comprehensive overview of the top tax benefits associated with savings insurance, ensuring you are well informed to make the best financial decisions.

Key Takeaways

Summary of Main Points:

Savings insurance offers multiple tax benefits, including premium deductions and tax-free maturity benefits.

Understanding the tax advantages can help you maximize your savings and secure your financial future.

Highlight Key Tax Benefits:

Premium deductions under Section 80C

Tax-exempt maturity benefits under Section 10(10D)

Tax-free death benefits

Advantages of partial withdrawals

Importance for Financial Planning:

Integrating savings insurance into your financial plan can provide security and tax efficiency.

What is Savings Insurance?

Savings insurance is a type of life insurance policy that combines the benefits of insurance coverage with a savings component. It is designed to provide financial protection to the policyholder's beneficiaries in case of their untimely death while also helping the policyholder accumulate savings over time.

Definition and Explanation:

Savings insurance policies are long-term contracts between the insurer and the policyholder, where the insurer promises to pay a sum of money either on the policyholder's death or after a set period.

Types of Savings Insurance Policies:

Endowment Plans

Money-Back Plans

Unit-Linked Insurance Plans (ULIPs)

Key Features of Savings Insurance:

Insurance coverage

Savings accumulation

Potential for bonuses or dividends

Why Consider Savings Insurance?

Savings insurance is an excellent tool for long-term financial planning. It provides dual protection and savings benefits, making it a preferred choice for many individuals.

Benefits of Savings Insurance:

Ensures financial security for your loved ones

Helps in disciplined savings

Offers attractive returns on investment

How it Fits into Financial Planning:

Complements other savings and investment products

Provides a safety net for future financial needs

Long-Term Financial Security:

Guarantees a lump sum amount at maturity

Protects your family from financial hardships in your absence

Tax Benefits of Savings Insurance

One of the most compelling reasons to invest in savings insurance is its array of tax benefits. These benefits can significantly enhance your overall returns and provide additional savings.

Tax Deductions on Premiums

Premiums paid towards savings insurance policies are eligible for tax deductions under Section 80C of the Income Tax Act.

Eligibility Criteria:

Available for individual policyholders and HUFs (Hindu Undivided Families)

Maximum Deduction Limits:

Up to INR 1.5 lakh per financial year

Examples of Deductions:

If you pay INR 50,000 annually for your savings insurance, you can deduct this amount from your taxable income, reducing your tax liability.

Tax-Exempt Maturity Benefits

The maturity benefits received from savings insurance policies are typically tax-exempt under Section 10(10D).

Conditions for Tax Exemption:

The premium should not exceed 10% of the sum assured for policies issued after April 1, 2012.

Impact on Overall Returns:

Enhances the effective return on investment

Comparison with Other Savings Options:

Unlike fixed deposits or mutual funds, where maturity proceeds are taxable, savings insurance offers a tax-free lump sum.

Tax-Free Death Benefits

In the unfortunate event of the policyholder's death, the death benefits paid to the beneficiaries are completely tax-free.

How Death Benefits are Treated under Tax Laws:

The entire amount received by the nominee is exempt from tax

Benefits for Beneficiaries:

Ensures financial stability without any tax burden

Importance in Estate Planning:

Facilitates smooth transfer of wealth to the next generation

Tax Benefits on Partial Withdrawals

Some savings insurance policies allow partial withdrawals, which can also enjoy tax benefits.

Rules and Conditions:

Allowed after a specified period, usually after five policy years

How Partial Withdrawals are Taxed:

Often tax-free if the premiums and sum assured meet certain conditions

Advantages over Other Savings Instruments:

Provides liquidity without a tax penalty

Tax Advantages under Different Sections

Different sections of the Income Tax Act provide various tax benefits for savings insurance.

Section 80C: Premium Deductions:

Deduction up to INR 1.5 lakh for premiums paid

Section 10(10D): Tax-Free Maturity Proceeds:

Conditions for exemptions and tax-free maturity benefits

Other Relevant Tax Sections:

Specific provisions that may apply to certain policy types

How to Maximize Tax Benefits from Savings Insurance

To make the most out of your savings insurance, it's essential to understand and leverage the available tax benefits effectively.

Strategic Premium Payments:

Pay premiums in a way that maximizes your Section 80C deductions

Combining Savings Insurance with Other Tax-Saving Instruments:

Pair with other investments like PPF or ELSS for diversified tax-saving

Long-Term vs Short-Term Considerations:

Focus on long-term policies to gain full tax benefits over time

Common Mistakes to Avoid

While savings insurance offers numerous benefits, avoiding common pitfalls can help you maximize your returns and tax savings.

Overlooking Policy Terms:

Always read and understand the terms and conditions

Not Considering Tax Implications at Maturity:

Ensure your policy qualifies for tax-free maturity benefits

Ignoring Changes in Tax Laws:

Stay updated with tax laws to avoid unexpected liabilities

Conclusion

Savings insurance provides a unique blend of protection, savings, and significant tax benefits. Understanding and leveraging these benefits can enhance your financial planning and secure a better future for yourself and your loved ones. Incorporating savings insurance into your financial strategy offers peace of mind and optimizes your tax savings.

FAQs

What is the primary tax benefit of savings insurance?

The primary tax benefit of savings insurance is the deduction on premiums paid, which can be claimed under Section 80C of the Income Tax Act, up to INR 1.5 lakh per financial year.

Are the maturity benefits of savings insurance always tax-free?

Maturity benefits of savings insurance are tax-free under Section 10(10D), provided the premium paid does not exceed 10% of the sum assured for policies issued after April 1, 2012.

How do partial withdrawals affect the tax benefits of my savings insurance?

Partial withdrawals from savings insurance policies are often tax-free if certain conditions are met, such as the policy being in force for a specified number of years and the premium to sum assured ratio being within limits.

Can I claim tax deductions on the premiums paid for my family's savings insurance policies?

Yes, you can claim tax deductions on premiums paid for savings insurance policies covering yourself, your spouse, and your children under Section 80C.

What should I consider when choosing a savings insurance policy for maximum tax benefits?

When choosing a savings insurance policy, consider factors such as the premium to sum assured ratio, policy term, and eligibility for tax benefits under Sections 80C and 10(10D) to maximize your tax savings.

[thetaxguyin]

TDS Rate Chart for FY 2024-25 (AY 2025-26)

TDS Rate Chart for FY 2024-25 (AY 2025-26) SectionNature of PaymentThresholdTDS Rate (with PAN)TDS Rate (without PAN)194CPayments to Contractors and Subcontractors, AdvertisingSingle payment > Rs. 30,000 or Aggregate > Rs. 1,00,0001% (Individual/HUF) 2% (Others)5% (Individual/HUF) 20% (Others)194-I (a)Rent on Land, Building, Furniture & FittingsRs. 2,40,000 per annum10%20%194-I (b)Rent on Plant…

[chocolatenightmaretyrant]

Remember Obtain A Home Before The Tax Credit Expires!

Scraping up enough money to start your own small business can be challenging. By starting a internet home based business utilizing intention brewing a profit and journalizing what you must do each day you begin to deduct taxes even though you have not invested any cash. Everyone would like to pay less place a burden on.

The IRS is a massive bureaucracy but we know their poker game. that's why we teach you on this the mail like suprisingly low Tax attorney does. By mailing, you skip right past the bureaucracy and when things move slowly, it can be to your advantage.

Credit Card Rewards - You might think of yourself as lucky or may chore that you just travel for that company. Either way, it is possible to collect frequent flier miles, hotel rewards and vehicle rewards. Anxious cases, you should use those rewards for Personal Tax travel or upgrade business travel. A person's travel frequently or infrequently those rewards are in your personal tales. It is up to you how one can use thought. Using the miles, hotel reward or rental car rewards are tax open. In many cases there a nominal fees to use them.

A second way minimize your taxes through a tax plan is through deductions. Most people assume that tax deductions are only for business you. Itemizing your deductions is helpful. Many people can deduct things like health care expenses, car registration fees, the interest on your mortgage, and charitable novelties.

Lastly, products and solutions are finding money self-employed health insurance premiums, you might qualify for a deduction for insurance payments that covered after March 2010. This deduction applies for all children under age of 2010 at finish Corporations tax of all four. The IRS web-page will have further about this litigation.

The most effective way to useful pain together with minimum in order to Go to this site use keep accurate, detailed or higher to date records. A person cannot provide proper documentation for a deduction, then it is best not to claim it.

A few months ago, had been a massive recall regarding spinach because people were getting sick and dying from it. It has recently been reported the FDA knew concerning this tainted spinach but didnrrrt inform everyone. I guess I was your mistaken impression the FDA was a watchdog agency whose main purpose was to shield the populace.

[prophets-bookkeeping]

Ever wonder why the interest paid is never the same amount on every loan payment. The annual percentage stays the same, but the amount paid changes.

It’s because your paying the loan down and the amount that the percentage goes off of is less than the last payment you made.

Keep track of all your Monthly Loan Statements, it changes and you want that interest paid tax deduction at the end of the year.

If you need help keeping track of these, call me 509-818-0335 nathan@prophetsbookkeeper.com

#loans #bookkeeping #statements #APY

[loving-n0t-heyting]

I have been contacted by multiple "gaza fundraisers" which throw up all the classic red flags and bad auras of Scams

As noble as the impulse to help families fleeing from gaza is, please be careful in checking the reality of fundraiser claims. This includes treating most "vetting" as what it is: tumblr randos whom you do not know saying "Oh this is totally legit, trust me bro"

If you want to donate to those impacted by the genocide with minimal risk of being scammed, consider donating to major aid organisations like unrwa

[kingoftieland]

Hugh Jackman’s F-BOMB in X-Men: First Class gave him a TAX WRITE-OFF! 💸

[queerliblib]

QLL in the media again! Love what we’re doing?! Help us keep doing it 🌈 📚

[flowerakatsuka]

this one goes out to dk, your tags on my last kurokara post made me lose it bc one of kuroba's main modes of transportation is, in fact, a kei truck.

[hollowtones]

I haven’t been keeping up with rtvs stuff because of life stuff so sorry if this is old news but omg congrats on getting married!

This is a sweet message but we’re not technically married yet LOL it is a term of endearment

[cightnourt]

"A receipt from the IRS? 'Seventy-four thousand, 861 dollars. Paid in full. Thank for stopping by.' They took it all?"

Night Court - S02E16