Who in this world loves even the very thought of a huge amount being deducted as tax from his hard-earned money? Most of us tend to suffer from tension and panic to decide how to save on our tax amount in the best possible way. For years, a lot of tips and strategies on the “Art” of tax saving have been doing rounds in market…and many people including you may already have tried them out too. But did you know that your tax amount can be saved by utilizing your insurance coverage too? If not…then I would like you to read on to find out how actually your insurance policies can be used to get you a good percentage of deduction on your payable tax amount.
1. Consider the insurance premium as a deduction on your federal tax returns
While you plan to file your tax return, consider the premium you pay for your car insurance policy as a deduction (if you use your car for business purpose) along with the actual expense.
2. Deduct your long- term care and health insurance premium on tax return
The long-term care insurance and health insurance plans usually are useful enough to reduce your payable tax amount. For example… a person who is self employed can deduct about 100% of health and long-term medical cost for himself and his dependents in his family. So if you are paying long-term care or health insurance premium, never forget to consider it for deduction while filing your tax return file. Acctually, this helps us to save on our income.
3. Find out your eligibility to get a reduction on income
Depending on your net income, the premium you pay for some long-term care insurance, some dental insurance and health insurance policies are sometimes deductible from your tax return….but the deduction rate is low. Normally the deduction is limited to 7.5% of your income.
4. Chalk out your medical expenses to get highest deduction on tax
Medical expenses of any person are limited. This does not exceed the 7.5% limit of ones income.
Important point to remember: if you wish your payable tax amount to be reduced while filing your tax return, all the procedures should be customized before December 31 of each tax year.