Answer
The tax saving strategies are such strategies, which legally allows:
1. To decrease the taxes on the income so that one can keep more of his earnings.
2. To decrease the taxes on the investments so that the wealth can grow faster.
Work Step by Step
The meaning of tax savings is that a decreased amount of tax is paid by the person either because a specific kind of investment income is not taxed at all or taxed at a low rate or because only a part of the income is taxable.
The tax saving strategies are such strategies, which legally allows:
1. To decrease the taxes on the income so that one can keep more of his earnings.
2. To decrease the taxes on the investments so that the wealth can grow faster.
The most commonly recommended tax-saving strategies are as follows:
1.Investment in the municipal bonds results in tax savings as their interest is not subjected to the federal income tax.
2. The tax liabilities are deferred through the investment choices such as defined contribution, pension plans, and similar kind of tax saving plans.
3. Investments in the real estate as it results in the substantial tax-deductible expenses which offset the income and result in tax saving ultimately.
