Although many tax-saving strategies are geared towards business owners, it is still possible for W-2 employees to implement a variety of techniques to save a substantial amount of money in taxes.

In this video, tax expert Karlton Dennis breaks down five of the best ways to reduce taxes on W-2 and active income. He covers real estate investing-based strategies such as qualifying for real estate professional status and using the short-term rental rule. The short-term rental rule involves renting property for 7 days or less as opposed to renting it out for a longer period.

Additionally, Karlton also explains how charitable donations and certain tax-advantaged retirement accounts such as traditional 401ks can be used to lower a tax bill. This video is helpful for anyone who works a W-2 job but wants to lower their taxes.

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*Disclaimer: I am not a financial advisor nor am I an attorney. This information is for entertainment purposes only. It is highly recommended that you speak with a tax professional or tax attorney before performing any of the strategies mentioned in this video. Thank you.

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As tax season approaches, many individuals are looking for ways to reduce their tax burden and maximize their take-home pay. For those with W2 and active income, there are several strategies that can help minimize the amount of taxes owed to the government. Here are the top 5 ways to reduce taxes on W2 and active income.

1. Contribute to a retirement account: One of the most effective ways to reduce taxes on W2 and active income is to contribute to a retirement account, such as a 401(k) or IRA. Contributions to these accounts are made on a pre-tax basis, which means that the money is deducted from your gross income before taxes are calculated. This not only reduces your taxable income for the year, but it also allows your retirement savings to grow tax-deferred until you start taking withdrawals in retirement.

2. Take advantage of tax credits: There are a number of tax credits available to individuals with W2 and active income that can help reduce their tax liability. For example, the Child Tax Credit and the Earned Income Tax Credit can provide significant savings for families with children, while the American Opportunity Tax Credit can help offset the cost of higher education expenses. By taking advantage of these tax credits, individuals can lower their tax bill and keep more of their hard-earned money.

3. Itemize deductions: While the standard deduction is available to all taxpayers, some individuals may benefit from itemizing their deductions instead. By keeping track of expenses such as mortgage interest, property taxes, and charitable contributions, individuals can potentially lower their taxable income and reduce the amount of taxes owed. It’s important to carefully consider whether itemizing deductions makes sense for your specific financial situation, as it may not always result in a lower tax bill.

4. Utilize flexible spending accounts: Flexible spending accounts (FSAs) allow individuals to set aside pre-tax dollars to cover qualified medical and dependent care expenses. By contributing to an FSA, individuals can reduce their taxable income and save on taxes while covering essential healthcare and childcare costs. It’s important to note that funds in an FSA typically must be used by the end of the plan year, so it’s essential to accurately estimate your expenses when deciding how much to contribute.

5. Optimize your tax withholding: Finally, it’s important to review and adjust your tax withholding to ensure that you are not overpaying taxes throughout the year. By completing a Form W-4 and updating your withholding allowances, you can ensure that the right amount of taxes is being withheld from your paycheck. This can help prevent a large tax bill at the end of the year and allow you to keep more of your income throughout the year.

In conclusion, there are several strategies that individuals with W2 and active income can employ to reduce their tax burden and maximize their take-home pay. By contributing to retirement accounts, taking advantage of tax credits, itemizing deductions, utilizing flexible spending accounts, and optimizing tax withholding, individuals can lower their taxable income and keep more of their hard-earned money. It’s important to consult with a tax professional to determine the best approach for your specific financial situation and ensure compliance with tax laws and regulations.