Tax Minimization Strategies – Everything You Need To Know

The more money you make the more taxes you will pay! Generally an unexpected tax bill can probably ruin everyone’s day. Therefore to avoid those unnecessary surprises, it is often important to make smart moves and help reduce your tax bills. Since the United States tax laws are coded in such a manner that high-earners pay high-tax rate, the ultra-wealthy people often take advantage of the law to cut down their tax rates.

While there are many different and creative ways to reduce the amount of tax you pay, there are few outstanding tax strategies on the radar that can help cut the taxes without making many extra efforts. This article has itemized some of the important strategies that can help reduce the standard deductions.

Tax Minimization Strategies – To Slash Tax Rates

Use Retirement Savings Plans To Reduce Higher Taxes

When you have less taxable income then obviously you will pay lesser tax. When you are a member of pension’s plan, you can easily achieve this because each time you are paid, your employer withholds the money for the federal income taxes. This in turn invariably dependent on expected taxable income.  In fact, 401(K) is one of the most popular ways to reduce tax bills. With 401K you may lower the tax bills and build great financial security.

Form W-4 And Take Home Pay

W-4 is basically a tax form that you complete and give it to the employer. Individuals often have a confusion of W-4 with IRS but W-4 has the greatest potential to adjust your tax withholdings sometimes even with $0 return. Under the new tax law, the more allowances you claim, the less federal income your employer will withhold. Generally claiming 1 allowance is wise because you will have only a minimum tax withheld from your paycheck. Especially when your filing status is single or unmarried, it is perhaps the safest choice.

 Charitable Donation

The charitable donation deduction allows an individual to reduce their taxable income for donations or gifts to qualified, tax-exempt organizations. When you file your income tax return, you can report your charitable donations and claim your tax credits. However, the donations you make should be eligible for tax credits. The US and Canada have generous tax credit systems for donors to charities. In fact, individuals may deduct cash and other contributions up to 60% of the adjusted gross income. In a nutshell, the taxable income of the donor is reduced by $300.

Making Savings In The IRA

Making contributions to the IRA is perhaps an excellent way to cut down your tax bills. You can defer paying income tax up to $5,500 when you contribute to an IRA. There are two major types of individual retirement accounts, Roth IRAs and Traditional IRAs. Contributions in both these categories can deduct your tax rates by a considerable margin. For instance, if you are in the 25 percent tax bracket and you are making a deductible IRA contribution of around $5000 -6000 then you can save around 1300 – 1400 dollars in taxes just for the first year. Making successive contributions in the future will help you save thousands of dollars in taxes.

Funding Your Flexible Spending Account (FSA)

Unlike Health Savings Accounts or Archer Medical Savings Accounts which usually requires reporting in the form 1040, FSA doesn’t require any form of reporting in the income tax return. The contributions you make to the flexible spending account though not tax deductibles but still, reduce your taxable wages. Generally, the money used to fund FSA is pretax meaning the funds are deducted from your salary before the taxes are deducted. Ultimately you are saving a percentage of money that you actually need to pay to the federal tax. When you pay a sum of $2000 after signing the FSA account you can enjoy benefits up to $600 if your tax bracket is 30%. FSA can maximize your savings potential


In addition to this, you can also make use of defined benefit plans, simple IRA that could be cheaper and more effective to save and reduce your tax bills. Similarly if you planning to make charitable donation, offer shares to public company because you will be equally benefitted with it.

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Managing Your Finances With Gold Loans

In the perfect world, everybody will have good money to meet all their needs. However, in the real world scenario, things don’t work as expected. Especially the middle class and lower middle class people are often struck with finances and there is always a room for loans for managing their finances and to meet their goals. Apparently, banks and non-banking financial companies offer instant gold loan against your gold jewelry with the lowest interest rate. The amount of loan is based on the value of the gold.

These organizations target prospective customers through emails, SMS’s and phone calls. Most of these finance companies offer loans with the lowest interest rate that acts as an alluring factor for the customer with quick disbursals and easy processes.

Managing Your Finances During The Cash Crunch

Both banks, as well as, non-banking sectors offer gold loans for the customers, however, the interest rate of non-banking financial companies are considerably higher than the public bank sectors but they offer faster disbursement with a minimum timeframe. Also, their paperwork is straightforward and simple which can be done without any assistance.

People getting cash crunched is not something new to hear. Every one of us whether rich or poor face a cash crunch situation at some point of time in their lives. Apparently, gold loans act as a great life saver during those instances. Many banks and financial companies help the customer to get instant loans and walk out with their money in less than 30 minutes. Almost all forms of gold such as ornaments, bars, and jewelry can be pledged and get a maximum of 75% cash based on the value of the gold. In addition, the replacement option is flexible so the customers will not face huge stress unlike other loans when repaying the gold loans.  However, there are some golden rules to follow before you take any type of loans.

Essential Rules To Follow When Taking A Loan

Although the gold loans exist for many long years yet many people consider the yellow metal as an asset or a possession and doesn’t prefer pledging even during cash crunches. Instead, they look for other loan options like the personal loan or mortgage loan to meet the financial needs.

However, in the olden ages, gold was regarded as a safe haven during economic downtimes and the people in the ancient ages traded gold with other items. As years progressed, people began to consider gold as a possession and were not ready to trade.  Nevertheless, gold loans are increasing in popularity in the recent ages due to low-interest rate, faster dispersal, and less paperwork.

The monetization of gold is not a new way to get loans against the value of the ornaments or jewelry but now it has been made in a more organized and structured way to keep the transactions transparent and ensure proper protection to the customers.

There are a few essential rules you need to follow so that you will not get trapped by debts

Comparative Analysis Of Different Banking And Non-Banking Sectors

Make a comparative analysis on various websites, read their terms and conditions, loan approval process, repayment options and most importantly the interest rate. Every lender has their own range of loan amount and willing to pay for the purity and weight of the metal. Generally, the pawnbrokers rate the loan based on the percentage of the gold in relation to the daily trading price. So, when you browse through the different website you will eventually get a better insight about all these options.

Don’t Get Enslaved By Debt By Borrowing Money More Than Required

The first and foremost rule of borrowing is to do smart borrowing.  An old adage says, “Don’t live beyond your means” The meaning of the saying is, don’t borrow more than you can repay. Borrow the amount that you can repay easily. Borrowing heavy loans can add stress to your personal and financial life and can ruin your happiness

The Bottom Line

Many banks attract customers by offering low-interest loans and also taking loans with these banks can be fairly easy. However, taking loans without reasons is not a healthy decision.

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Reap Lower Tax Rates With Less Income

Forget mortgage payments, rent, car, or other extravaganzas – income tax in one biggest thing that is bothering most of the American families when financial year comes to an end. When there are changes to the tax rules, you should be prepared to get accommodated to the changes. At the same time, it can certainly impact your other loans say for example your car and mortgage loans.

Generally, you can experience tax changes when there is a change in the government or when a new government comes into power.  Otherwise, you can expect changes when there is a budget or the government releasing some tax goodies to cover up the tax ambiguities. Unless you keep your eyes and ears open, you might miss some tax changes that can impact any of your important commitments. In the worst case scenario, you could even face a reassessment or penalty from the United Stated Revenues for declining the tax changes.

Before getting deeper into exploring solutions for reducing taxes, in the first place, let us understand what exactly the tax system are and their types?

Tax And Its Different Types – A Small Overview

In the United States of America, tax is set up on both the federal level and state level. Taxes are classified into different types such as income tax, sales tax, capital gains and many more. These taxes are categorized into regressive, proportional and progressive taxes. Regressive taxes have a greater impact on low-income earner than from high-income earners.

However, proportional tax systems are quite different. It requires the same percentage of income from all taxpayers irrespective of their income. In a nutshell, it is referred to as flat tax because the percentage of the tax taken from the person’s income remains the same no matter how much income the individual earns.

Apparently progressive taxes are a solace for low-income earners because this type of taxation system imposes lower taxes on low-income earner when compared to those of higher income. Taxpayers should pay higher taxes when they earn more incomes or pay lower taxes for lesser income.

Regressive Taxes

Taxes are bound to be regressive when they impose harsher pain on the poor than the riches. In a number of families, they cannot even afford to cover up for their basic needs such as food, clothing, and shelter however these tax systems add more burden to their existing miseries. However, on the other hand, regressive taxes don’t impact the basics of riches yet it limits their ability to make other investments like retirement plans, investments in stocks and mutual funds and planning a dream vacation. This tax includes sales, property and income tax.

Proportional Taxes

With this taxing system, the lower class, middle class, and upper class all pay the same rate of tax regardless of their income.  In other words, it imposes the same relative burden on all the taxpayers. Sales tax is a typical example of proportional tax because all the consumers irrespective of their incomes pay the same fixed rate.  One of the greatest benefits of this tax system is, it reduces the tax theft from rich sectors of the community. When there is a variation of tax rates, the riches often look for loopholes to dodge tax paying however proportional taxes doesn’t give room for such things.

Progressive Taxes

This tax policy requires higher income earners or individuals with wealth to pay taxes at a rate higher than those with lower incomes. Although the riches opposes this policy yet it is welcomed by the poorer sections. Progressive taxes shifts the tax burden to those able to pay however the inflation can push the taxpayers into a higher tax bracket. Apparently, supporters of progressive taxes claim that higher salaried people have the ability to pay higher tax rates so this is the fairest system. Wealth, property tax, tax on luxury goods or exception of sales tax on basic essentials fall into the progressive tax system.


While the US tax code is structured so the wealthy pay higher tax rate, the low-income earners often take advantage of this situation and enjoy tax benefits. They even figure out ways to fit their income in retirement savings and plan for emergencies.

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Don’t Let Investments Lie Idle And Overcome Your Investing Inertia

Financial planners insist to keep at least three months of expenses as emergency funds. However, not everyone is smart enough to follow these practices. As a matter of fact, many families cannot even afford thinking about these situations since many households rely on their daily wages to keep their life moving. So what to do during a financial emergency and how to deal with the situation?

Most individuals often opt for borrowing loans either through credit cards or personal loans to meet their financial crunches. However, financial strategists consider getting a gold loan is rather a smarter decision. Gold loans are usually offered by accepting the gold ornaments or jewelry as a pledge by the customer in return for cash. Gold jewelry is used as collateral for gold loans.

In the recent ages where security has become a problem, men and women hesitate to wear gold jewelry and most of their jewelries are often lying in the locker for months or even for years together. So, instead of taking other loans, or using your assets as collateral, you can go for gold loans and make use of your unused ornaments lying idle.

South Asian countries like India hold about 18,000 tons of gold privately. Out of which 70% are made into ornaments and jewelry. This report was recently released by the World Gold Council. When this gold is converted in terms of money it accounts for almost 30 trillion which is only 50% of Indian domestic products. So why not use this money when there is a crisis or during a predicate situation?

With drastic developments and changes in the financial sectors, many banking and non-banking financial corporations are bringing in a lot of new prospects to the customers and making gold loans truly inevitable. Gold loans are perhaps one of the best loans for the customers because it is offered with minimum interest with a much faster dispersal. Moreover, there is very less paperwork for processing this loan when compared to other loans.

Common Queries When Going For A Gold Loan

Are you thinking to apply for a gold loan then you should know a few things before applying for one?

Most individuals consider gold as a safety net in an event when currency fails or accumulating for financial security to stay safe in the future. Pledging gold for money is a common practice is not only in many Asian countries but also in countries across the world. When people are in need of money, this is often a much easy way to get cash. There are many gold loan program offered through banks that allows you to borrow money against the value of the gold.

However, it is not advisable to go for a bigger loan because as the amount goes higher, the interest rates are pretty hefty. At the end of the day, you will repay the money that will be double the value of the gold.  So there are few things you need to consider before applying for this appealing metal loan

Know Everything About Gold Loan Program

The programs combine the security of the yellow metal with a prospective opportunity for investment.  It also allows you to take money against the value of the gold that is safely secured in Zurich, Switzerland.

The Type Of Gold You Should Pledge

Banks and non-banking sectors offer loans for gold ornaments however, you can check for the option whether you will be granted loans against gold coins and gold bars as well. Not all corporation allow gold coins to be pledged. However some financial corporations like JP Morgan allow the clients to use the metals as collateral in some transactions.

The Amount You Are Eligible To Avail

Basically you can get 75-85% of funds against the value of the gold but it also depends on the purity of the metal. Hallmark jewelry perhaps worth better and are considered preferential gold for many banks.

To Sum It Up

In addition, you need to consider other factors like the loan terms (depends on the needs of the borrower),  pre-payment charges and more so that you will not be slapped with unexpected charges later.

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