How to Save Money on Tax for Effective

How to Save Money on Tax for Effective - Most people believe that they can save money by not paying taxes and can benefit in the long run. However, nothing can be further from the truth as non-payment of taxes almost always results in additional penalties and interest as a result of which you end up paying more than expected. Hence the best way to save money is to pay all your taxes as soon as possible by following different payment plans.

Be Eligible for Deductions & Exemptions
Most people are eligible for credits, deductions and personal exemptions that lower the amount of tax payable by a great extent. However, these can be claimed only if a return is filed thereby making it extremely important to file returns and pay taxes on time. If the amount to be paid seems to be large, it is best to follow a payment plan that splits the money to be paid each month or week. This makes it easier to pay the taxes due.

Avoid Penalties & Interest Charges
There is a stipulated period within which each and every person should file a return and pay the taxes that are due. In case taxes are due and a return is not filed on time, there are several penalties and interest charges that can increase the amount of tax payable by up to 25%.

File Within 3 Years For Maximum Benefits
People who file their returns and pay taxes within 3 years of the due date of return are eligible for refunds and also for the Earned Income Tax Credit. These can add up to a substantial amount over a period of time thereby making it necessary to file returns and pay taxes at the earliest.

Continue To Receive Social Security Benefits
All the benefits offered by the Social Security Administration are valid only if the taxes are paid on time. People who do not file returns can be refused the benefits they get from the system.

Always remember that it is best to pay taxes on time and file returns prior to the due date as failure to do so can not only result in penalties and interest charges but can also impact your life in a big way.