The Amazing Guide to Saving Taxes Through Family 2023

Introduction

No matter how much we may have disagreements with our family members, here, we have The Amazing Guide to Saving Taxes Through Family 2023. there’s no denying that they always have our backs. They act as our loyal allies, helping us conceal questionable matters from our parents and providing support in numerous situations. But did you know that your family can also rescue you from financial troubles? In India, where only 21 percent of women are employed, many families rely on a sole breadwinner. In such cases, it becomes imperative for families to explore every available opportunity to save money.

Tax-saving Strategies

Even if both you and your spouse are earning, there are tax-saving strategies that can benefit your family in the long term. It’s crucial to involve your family members in financial planning and embark on this journey together. Let’s delve into some of these strategies and understand how they can assist you in saving money.

Senior Citizens & Super Senior Citizens

One effective way for your family to save on taxes is by leveraging the benefits available to senior citizens and super senior citizens. They enjoy higher basic exemption limits of 3 lakhs and 5 lakhs respectively, compared to the 2.5 lakhs limit for regular individuals. By combining the tax liability for both you and your parent, you can significantly reduce the taxable income. However, this requires careful planning and a thorough understanding of the applicable tax laws.

Senior citizens also have access to specific tax provisions that can work in their favor. For instance, they can avail a deduction of up to 15,000 rupees on the interest earned from savings and deposit accounts. Banks even offer an additional 0.5 percent interest to senior citizens on their deposits. By investing in the name of your senior citizen parent instead of yours, you can avoid higher tax liabilities and maximize these benefits.

Health Insurance

Another effective way to save money is by purchasing health insurance for your parents. Under section 80D, you can claim deductions of up to 25,000 rupees for the health insurance premium paid on behalf of your parents. If your parents are senior citizens, the deduction limit increases to 50,000 rupees. Additionally, medical expenses incurred for specified illnesses can be tax-deductible under section 80DDB.

House Rent Allowance

If you live with your parents and pay rent to them, you can also take advantage of the House Rent Allowance (HRA) benefit. While the rental income is taxable for your parents, they can claim deductions under section 24 for repair and maintenance expenses, thereby reducing their overall tax liability. This arrangement not only helps you save money through HRA but also benefits your parents.

If you are a freelancer or a business owner, there are specific strategies you can employ to optimize your tax savings. For example, if your family doesn’t own a house in your city, you can enter into a rental agreement with your parent who owns the property and pay them rent. This rent can be claimed as a deduction under section 80GG. Similarly, if you own a residential property, you can consider living with your parents and claim deductions under section 80EEA.

Saving Taxes On Your Children

Siblings can also contribute to tax savings within the family. Monetary gifts received from siblings are tax-exempt, providing an opportunity to save money without any upper threshold. If you are a legal guardian to your siblings, you can claim tax benefits for their education loans under section 80E. This can help you reduce your taxable income and save on taxes.

When it comes to saving taxes on your children, investing in their name can be advantageous. Since children usually have a lower tax liability, you can make investments on their behalf, ensuring that the returns are taxed at a lower rate. Additionally, tuition fees paid for your children’s education can also be claimed as a deduction under section 80C, further reducing your tax liability.

Another avenue for tax planning is the Hindu Undivided Family (HUF). It is a separate tax entity that allows you to utilize deductions and benefits not available to individuals.

Conclusion

By exploring these tax-saving strategies and actively involving your family members in financial planning, you can pave the way for substantial savings. Remember, when it comes to finances, teamwork within the family can truly make a difference.

You can refer here for more tax saving details. Also, you can check the finance related information here..