Tips For High Income Group On Saving Taxes | Eric Finance

A lot of professions and industries are quite high paying. People start to earn good packages right from the beginning of their careers, and there are even more advantages if the person has recently finished a post-graduate course, such as an MBA. Those who fall under the high income bracket obviously feel very happy with the money coming in, but it pains them to see equally high amounts of money going as taxes, when they are filing their Income Tax Returns each year.

So does this mean that, one who earns a lot, also has to pay a lot of taxes? Well, this is not entirely true. Yes, the tax paid by high-income people is more than that of other individuals. However, there are certain ways and techniques of saving that precious money, by investing it in the right avenues.

Charitable Causes

One of the best ways to save money on taxes is to donate it to charitable institutions. Donations can give either a 50% or a 100% tax rebate, depending upon their nature, and the organization to which they are being made. It is important, however, to save all the receipts of donations as proofs, so that they can be attached along with the tax returns.

Forced Alimony

One can seek some kind of benefits if he is paying forced alimony after a divorce, for instance, as per a court order. There are few chances of getting any benefits on alimony being given by one?s own will, or as per mutual understanding between the two people concerned. However, one?s specific case can be discussed with an expert, in cases where a person might be paying alimony by his own will, but may be providing the education fund for a child under the custody of the other party.

Education

Pursuing any form of higher education, where the payments are not being reimbursed by anybody else, can help one get some tax benefits. This will depend on the nature of the course being pursued, as well as the fee for it.

Investing In Retirement Plans

A certain chunk of the income portfolio can be directed towards investments in retirement plans, which help one get some benefits on the tax front. These retirement plans can be government ones and private ones both, however, there is a limit to the amount of investments on which one can avail the tax benefits.

Medical Bills and Expenditures

Usually people go in for some kind of insurance policy to cover their huge medical bills in times of crisis. However, if a high-income person does not have an insurance policy that covers such medical expenses, then he/she can get tax benefits when such expenses are made. It is advisable to go through a list of expenses, which qualify under this scheme. These are usually explained on the Income Tax website.
Careful planning, and smart division of the money from the income portfolio as investments in the right avenues, can help one save a lot of taxes. If one is new to all of this, he/she should opt for a professional consultant for the same.

Guest post authored by Lauren Devaney of Pay Day Loans. She helps provide finance tips and works on providing quick loan service.

Source: http://www.ericfinance.com/saving-taxes/

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