5 Simple Strategies to Reduce Tax - Part II

In our first tax-reduction strategy discussion, we focused on the non-taxable income.  Now we will look at your AGI deductions.  If you can maximize your AGI deductions, you will see lower tax bill.

Below is a list of legal AGI deductions, please take advantage all of them whenever possible!

• All allowable expenses incurred in a taxpayer’s trade or business, not including business expenses of an employee
• Employee business expenses that are not reimbursed by the employer
• Losses from the sale or exchange of trade, business, or investment property
• Expenses attributable to the production of rent or royalty income
• Moving expenses
• Contributions to certain pension, profit-sharing, or retirement plan arrangements 
• Penalties paid to a bank or other savings institution because of the early withdrawal of funds from a certificate of deposit or time savings account
• Alimony
• Interest paid by certain individuals on qualified educational loans
• Heath insurance costs of self-employed individuals
• One-half of the self-employment tax paid by the taxpayer
• Educator expenses  
• Health Savings Account

In our next blog post, we will discuss the third tax-reduction strategy - take the larger of Standard and Itemized Deduction.