No one likes to pay taxes but to paraphrase founding father Benjamin Franklin, it is one of the few things you're guaranteed to deal with in life. With that being the case, understanding them can help you save money on your tax bill.
Taxes are unavoidable, but you can minimize the impact they have on your bottom line. Every scenario is different, of course, but one thing is universally true: "Planning is the key to taxes," says Carol W. Thompson, a tax professional in the Portland, Maine, region.
The goal of tax planning is to arrange your financial affairs so as to minimize your taxes. There are three basic ways to reduce your taxes, and each basic method might have several variations. You can reduce your income, increase your deductions, and take advantage of tax credits.