Paycheck Tax Deductions That Save You Money

You can take paycheck tax deductions that save you money without affecting the net amount of your check by more than a few dollars.

Cafeteria Plan

Your company's cafeteria plan can save you a ton of tax dollars. A cafeteria plan allows you to deduct money to pay for the cost of daycare and out of pocket medical expenses through a special untaxed account. You specify how much money you want withdrawn from your check each month, then file claims to obtain the money as you spend it. You don't pay taxes on the money, so while your paycheck is reduced, so is your taxable income. You can submit receipts throughout the year for daycare and medical expenditures, including co-pays, over the counter medicines, and glasses.

401(k)

Another great way to save money is to sign up for your company's 401(k) plan. Funds paid into your 401(k) account are also deducted before you are taxed and reduce your taxable income. Particularly if you work for a company that matches your contributions, you should contribute the maximum possible that you can afford. No 401(k) plan? Self employed? Enjoy the same benefits by making regular contributions to an IRA.