Salaried employees are always the most diligent taxpayers. Here are some useful tips to plan the tax for the upcoming year.
#Tip # 1 – Get on top of your tax rate
Find out the tax slab you fall into before you decide to start making tax saving investments. Once you know your tax slab find out the exact amount you need to save to enable you to pay the least tax.
#Tip # 2 – Know How Much Tax you need to Pay
Once you know your tax rate, the next obvious thing is to calculate your tax for the financial year. Always calculate your tax on your current income. If you have a windfall later, provision for it only then. I have seen many people procrastinate and not calculate their tax from the beginning of the year anticipating a change. The smartest thing to do is calculate your taxes and start budgeting and paying it from the beginning of the year.
#Tip # 3 – Know your Tax-savings Investments
There are many tax savings instruments out there. Learn about them. Dont depend on your agent to tell you about the products. Financial education is a must for anyone paying any significant amount of tax. Dont let all your hard work and earnings drift into non essentials because spending a few hours to learn about investments was too much.
#Tip # 4 – Know about your Special Tax Savings Allowances
Many a times many expenses and allowances are part of tax savings instruments. Employers can pay food coupons in lieu of salaries, sometimes expenses for children education can be deducted from your total income, transport allowances, medical bills, holiday bills, there are so many ways one can save taxes by just a little bit of judicious planning. Just remember, these instruments are there for purpose, for you to use them, with tax saving as an added inducement. So DON’T
Here’s wishing you a Happy Taxed Year