What if you are told that you can save money in taxes even if you are a salaried individual? Sounds good? Go through this guide about how to minimize taxes on your salary and wages to benefit.
If you want to learn how to minimize taxes on your salary and wages, consider structuring the compensation that you receive from your employer in a tax effective manner. Consider getting paid more in stock options and less in regular salary.
An option is a right to purchase shares in your employer’s capital stock for a very low price. Imagine if you were given stock options to purchase Apple shares for only $10 per share. Today you would be laughing. Stock options are not a taxable benefit to you when they are granted to you. They only become taxable when you exercise the option, meaning you actually get the shares. The taxable amount of the stock options is equal to the value of the stock options on the date of purchase, less what you paid for those options. Only half of the gain is taxable.
Another Way to Minimize Taxes on My Salary
When it comes to knowing about how to minimize taxes on your salary and wages, think about asking for a loan from your employer. The amount of the loan that you receive is completely tax free to you, so long as the loan is used to purchase a home that you are going to live in. When you eventually sell the house, return the loan in full to your employer, plus the interest at a reasonable rate. While you stay in the home you will be responsible for paying for the mortgage and the general upkeep of the house.
How to Minimize Taxes on Your Salary and Wages with Tax Free Benefits
You will be better off if you ask for tax free benefits from your employer. Examples of tax free benefits include:
• Costs paid by your employer for moving to a new job
• Personal counseling paid by your employer
• In house day care services
• Health and dental benefits, if it’s part of a group plan for all employees
One more way of how to minimize taxes on your salary and wages is by claiming employment deductions on your personal tax return. Employment deductions include:
• Car expenses if you are required to travel for work
• Supplies that you buy for your job
• Home office expenses if you work from home including rent paid to your landlord
• Union and professional dues
I hope you found this article about how to minimize taxes on your salary and wages useful. For more tips and tricks please visit my website, and get access to your free report, ‘20 Tax Secrets on How to Beat the Tax Man’.
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.