Here's the thing. The state, county, or city agency that collects your property taxes usually won't tell you that you qualify for an exemption. You need to find and apply for property tax exemptions offered in your area. Check the websites of tax agencies in your area to find out what tax relief is available.Nobody likes paying a dime extra in taxes. But ​​when it comes to property taxes, you could pay too much if you don't know you qualify for an exemption.You might spend a few hours doing the research and the paperwork, but you could lower your tax bill enough to make it worth your time.Here are five of the most common types of property tax exemptions: #1 Homestead Popular Reads. Many states offer property tax exemptions to older homeowners and the disabled.

Mar 24, 2020  When you make money from selling a house or property, your capital gains tax depends on whether you lived in the house and how long you lived there. Short-term capital gains. In general, you’ll pay higher taxes on property you’ve owned for less than a year. This is because short-term capital gains are taxed at the same rate as ordinary income.

Colorado exempts 50% of the first $200,000 of the actual value of your home for seniors and disabled veterans.There are age, income, and residency restrictions, so it's smart to read the fine print. A homestead exemption aimed at seniors may only defer property taxes until the home is sold.

And don't assume exemptions for seniors kick in at 65. Washington state reduces property taxes for homeowners the year after they're 61. Nashua, N.H., increases the amount of the senior exemption as you age. When you turn 65, you get a $192,000 exemption. That increases to $224,000 when you turn 75, and $280,000 when you turn 80.​You'll need to show proof of disability, like eligibility for Social Security disability benefits, to get a property tax exemption. #3 Military VeteransMany states offer property tax exemptions to veterans if they:.

Use the home as their primary residence. Served during wartime. Were honorably dischargedSome states offer property tax exemptions to all veterans, even those who served during peacetime. Others, like Pennsylvania, target disabled vets.You may need to meet other requirements, like the length of residency or income restrictions.

Parents and widows of disabled service members may also get property tax exemptions. #4 RenovationsIf you make home improvements, check for property tax breaks like these:. In Cook County, Il., you can make up to $75,000 in home improvements without paying taxes on the increased home value for up to four years. In Pierce County, Wash., you can get a three-year exemption for home improvements up to a certain percentage of your assessed value.Check with your tax assessor's office before you knock down a wall, though. You may need to apply for the tax exemption before you start work. #5 Energy IncentivesInstalling renewable energy systems in your house could pay off on your property tax bill as well as your energy bill. Some states exclude the value of certain green improvements from a home's real estate assessment.Eligible upgrades may include the installation of solar panels or geothermal heat pumps.Look for information on state and local property tax breaks for renewable energy systems on the.

#6 Other ExemptionsA visit to your local tax assessor’s office may turn up other less common property tax exemptions. Smithtown, N.Y., exempts property you build or renovate to give a grandparent a home. Some counties in New York state reduce the assessed value of the homes of volunteer firefighters. Some states offer widow/widower exemptions. It doesn’t hurt to ask if yours does.Are Exemptions Worth the Effort?The U.S. Median property tax paid is about $2,000 annually, or about 1% of the $200,000 median home value.

Savings from exemptions will vary widely depending where you live, the value of your home, and what you qualify for. A 15% exemption would save about $300.Related:.This article provides general information about tax laws and consequences, and shouldn’t be relied on as tax or legal advice applicable to particular transactions or circumstances. Consult a tax pro for such advice.

Dateline: Kotor, MontenegroToday we’re just going to jump right in. You’ve come for my best advice, and that’s what you’re going to get. So here it is, the four ways you can legally avoid paying US income tax: 1. Move outside of the United StatesOne of the fastest and easiest ways to reduce your income tax is to live outside the United States the vast majority of the time.

This is called the Physical Presence test of the (FEIE). This test has been well covered and it’s a very common tax strategy for most expats.According to the IRS, if you reside outside of the United States at least 330 days out of 365, you can exempt $101,300 of income from your annual taxes. The beauty of this strategy is that you can leave the US any time you want. I’m always telling you to get off your tuckus and go move today. Well, you can! And if you move you can start claiming benefits ostensibly 34 days back. Plus, even if you’re like me and you never go to the US, you theoretically get one month in the US.The one thing to be aware of is that the exemption specifically refers to time spent in a foreign country or countries.

It’s not just about “being out of the United States 330 days”, it’s about “being in a foreign country or countries.” What difference does that make? What it comes down to is that international waters and air spaces do not count.For example, recently the guy who was working on a yacht discovered that his time outside the US didn’t qualify him for the FEIE. International waters do not count; so once he passed 35 days in international waters he lost the exemption — even if he never went to the US.In general, however, the physical presence test is easy to qualify for. The only other thing to be aware of is if you have many flights over oceans. It’s more of an issue when you’ve spent four weeks in the US and then have several long overseas flights. If they ever look at your time in international air spaces they may just see that you were flying eight or nine days over oceans or that you were on a repositioning cruise for 12 days in the middle of the sea and disqualify yourself without knowing.So, while the Physical Presence test is a great and very simple strategy for reducing taxes, there are a few things you’ve got to be aware of to ensure it works. Establish a residence somewhere elseObviously, one of the things I always tell people to do is to get a second residency.

It makes sense on so many levels and for so many purposes. Reducing your US income tax is one of these purposes. However, there are only certain types of residencies that qualify (although that’s an entirely different subject). It really depends on your situation.In general, I don’t think this is a great idea. This is for people who want to spend more time in the US and can actually establish residence outside the United States. If you’re just going to be a nomad and a wanderer in a different country every other week for an entire year and then try and do the bona fide residence test, it’s not going to work. Even if you have a residence permit.

It’s not going to work. So this is a very difficult one.If you qualify under the bona fide residence test, you can spend up to four months in the US.

However, there are a lot of tax issues that come up if you’re running a business that you own and you’re spending four months a year in the US. The actual qualification process is very subjective.

According to the:Questions of bona fide residence are determined on a case-by-case basis, taking into account such factors as your intention or the purpose of your trip and the nature and length of your stay abroad. You must show the Internal Revenue Service (IRS) that you have been a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year.If we’re being perfectly honest, if you want to utilize the bona fide residence test, you’re probably going to need some help to figure it out. Not only are there a lot of ways that you could slip up and not do it correctly, but it’s also very difficult if you’re spending time in the US and running your business.

There are different opinions on how much time you should spend in your home country. If not done correctly, you could become subject to more tax problems than you started with.

If you want help,. Move to one of the US territoriesAnother legal strategy that is widely talked about is moving to a US territory like. Of course, and, personally, I don’t really trust them. But if you don’t mind the, there are two different ways you can save on US income taxes by moving your entire business to Puerto Rico.The first tax incentive is Act 20, also known as the Export Service Act. The act targets certain service businesses by offering incentives such as a low 4% export income tax and 0% tax on earnings and profits to those who choose to relocate and export their services from the island. You can see the full list of qualifying service businesses.Act 22, or the Individual Investors Act, on the other hand, specifically targets high net worth investors.

Zero percent tax on interest, dividends and capital gains. The only catch is that you have to spend at least half the year (183 days) in Puerto Rico. You can find more details on the act.A lesser-known act is the, or Act 273. Under this act, tax exemptions are made to businesses set up and engaged in eligible activities in Puerto Rico. To qualify, the international financial entity (IFE) must have authorized capital stock no less than $5 million.

The entity must also employ at least four individuals.Many people think they can qualify under Act 273 hiring chefs, maids, and chauffeurs and be fine. That’s a terrible idea. You should hire real employees who work at a real business, even if they’re just low level employees not doing a ton of work. Hiring a maid and a driver is not going to cut it. If they audit you, you’ll be in trouble.Puerto Rico is not the only US territory to offer tax incentives to businesses and investors. The US Virgin Islands also has a program.

The programs in both countries allow you to cut your taxes by about 90%. The caveat is that you need to spend at least six months a year there. Everyone will tell you that there’s some work-around, blah-blah-blah, but it’s very similar to the bona fide residence test, and it’s actually even worse because there’s a second closer connection test to determine where you are mainly based.Puerto Rico and the US Virgin Islands are great programs if you’re willing to really live there. And by really live there I mean at least six months a year AND not spending the other just less than six months in the mainland. You really shouldn’t spend that much time in the US mainland under these programs — only a few months a year.The potential benefit of these programs is best suited for those who are making large amounts of money and don’t want to settle for the FEIE (outlined in options one and two).

Because the FEIE only allows you to exempt up to $101,300 in 2016 and taxes everything else you make, the opportunity of 0-4% tax rates is actually very attractive. If you’re making big money, go for Puerto Rico.Do understand that there are ways that you can make a million dollars and not pay tax on the whole thing if you run a business overseas. It’s just that Puerto Rico allows you to spend the money. It allows you to take all the money out, rather than keep it all in your business. Renounce your citizenshipFor some people, doesn’t make a lot of financial sense, even with the tax savings. If you renounce you will have to pay an exit tax on all unrealized capital gains, from your business (which can be hard to value) to real estate to Bitcoins. For some that can be quite a blow.However, if you have less than $2 million to your name, you do not have to pay the exit tax — just as long as you’ve been paying your income taxes properly up until you renounce.

Most people will not pay an exit tax. If you’ve paid a lot in income taxes in the past five years, then you will still have an exit tax. The good news is that you can and, in some cases, after renouncing.The best news of all, however, is that if you renounce your citizenship you’re done forever. No more jumping through hoops or handing over half your income to the government each year. It’s a drastic move, but it’s legal. It’s not for everyone, but there are definitely where it makes sense for an individual to renounce their citizenship to get out from under the crushing burden of the US income tax. 3402 describes Employee’s not incurring no tax liability.

It’s in there look for it. Don’t let anybody fool you. The Federal income tax is just that.

A tax on income from Federal sources. And when your Employer sends you a W-2 stating you received Federal wages why did the IRS create form 4852 to correct his mistake? The IRS knows there is a difference. It’s their job to collect lawful income tax. It’s not their job to teach the law.

It’s our responsibility to know the tax law. The question is did you earn any Federal income to be taxed? As defined by F. Morris Hubbard in the 78th Congressional Record that taxable income is payment received from exercising a privileged occupation which is subject to excise taxes. Are you performing one of the 3 clasdified excise professions defined in USC Title 26?

Learn your Taxpayer’s Bill of Rights too.