Paying taxes can be a complicated process that is vital to do right to avoid penalties and legal woes down the road. It is also important so that you can maximize your deductions and guarantee that you get the largest refund back possible. People in different tax brackets have different laws and rules that may apply to them. If your annual income is more than $200,000, there are provisions in the tax code that can greatly benefit you.
State Sales Tax
People with annual incomes of more than $200,000 are more likely to have several "big ticket" purchases throughout the year, such as a new home, airplane or boat. Federal tax law allows you to deduct the sales tax that you paid on planes, boats, vehicles or homebuilding materials in addition to the sales tax deduction you already qualify for in your state. This can make a sizable difference in how much tax you have to pay or how much you get back at the end of the year.
If you have a higher income, you are in better position to donate money to charity, and these donations can also be used for sizable tax deductions at the end of the year as long as you retain written proof of a check donation or a payroll deduction. Keep a record of all your charitable contributions throughout the year. The larger the donation, the more sizable the tax write-off. Also include the cost of any materials that were used for a charitable activity. For example, if you drove to a charity event or function, you can deduct the mileage.
While energy-efficient home remodeling can be expensive, it offers steep tax credits for those who can afford the initial expense. The tax incentives combined with the cheaper utilities in the long term make this ideal for people with incomes over $200,000. Skylights, biomass fuel stoves, central air conditioners and other energy-efficient designs can be used for a tax credit up to 30 percent of the cost of the installation. Some installations have a tax credit limit of $1,500 maximum, but others, such as solar hot water heaters, wind turbines and geothermal heat pumps, have no such limitation and can provide the 30 percent credit with no limit on it.
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