IRS 5

You Can Actually Get Away Without Paying Taxes on These Incomes

There are two very simple mantras to avoid IRS trouble, pay your taxes on time and pay the right amount. Now, you are not really going to receive a letter of commendation for lending your money to the US government free but then again nobody can stop you either. There are some people who think that paying the IRS more than what they actually owe is like leaving the IRS a little tip which can be recovered in the future and is a small price to pay to avoid trouble.

However, the over payers are as wrong as the under payers and along the line both of them lose their hard earned money. You are only entitled to pay what you owe in tax debts. Having said that, you also need to understand that the IRS cannot tax all types of income because this is not allowed by the law. Understanding what can be kept legitimately without paying taxes on it can help you save a lot on you tax obligations. But you need to know for sure that a particular type of income is deemed tax free in order o avoid trouble.

For instance, tax free interest is one such type of income; you can earn this interest through various investment vehicles such as bonds issued by any political entity that is exempt from federal tax, and state issued bonds. These types of investments are commonly called municipals bonds and the principle collected trough their issue is usually used for infrastructural projects. When you buy municipal bonds the value of your tax benefits goes up when the marginal tax rate increases. In other words, if your income increased so does the value of the bonds giving you greater tax savings
Another source of money which cannot be taxed is any amount collected through collecting fees in a car pool. The money that you charge people in a car pool can also be kept without reporting it in your earnings and the IRS generally does not have any problem with it.
The capital gain from the sale of your home is another non taxable source of income. If you sell your home, you can deduct as much a $250,000 from the profits per person; this means that if you filing jointly, you can expect a deduction to the tine of $500,000. This exclusion can be claimed by tax payers every two years. However if you sell your home within two years of purchase you can only get a partial exclusion. Now, there are few restrictions to this law, so its is essential to get in touch with a tax professional to ensure that everything is being done correctly and that you are not headed towards imminent IRS trouble in the future.
The happiness of getting a raise or a promotion that involves an increase in the salary is often dampened at the prospect of paying the IRS more now that your earnings have increased. Actually, there is a way to get away by not paying the IRS and yet enjoy your raise. You have to understand that the IRS will only be taxing your cash salary. In other words, they will tax the money that you receive and not usually the benefits. So if you can get your employer to pay for some of the benefits, for instance, pick up the tab of your healthcare plan, or contribute more to you 401K , all these will escape the taxman’s radar and you will be able to enjoy the benefits of your hard work without the taxman’s noose inching towards your neck.
These are just some of the scenarios where tax can be saved; there are many others; however, it would be best to get in touch with a professional tax accountant to help you out. If you find yourself in trouble with the IRS promptly get in touch with a Dallas Tax attorney to resolve the problem.

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