"How can I reduce my tax liability legally?"

As a general rule, one can reduce their tax liability legally by taking advantage of deductions, credits, and exemptions allowed by the tax code. The following are some ways in which a person can reduce their tax liability legally:

1. Claiming all eligible tax deductions: Taxpayers can claim certain deductions which are allowed under the US tax code. For example, taxpayers can claim deductions for charitable contributions, education expenses, mortgage interests, and medical expenses. It is important to carefully research and understand the eligibility criteria for each deduction.
2. Maximizing eligible tax credits: Taxpayers can also claim certain tax credits which are allowed under the US tax code. For example, taxpayers can claim the Earned Income Tax Credit (EITC) if they meet the eligibility requirements. Taxpayers can also claim the Child Tax Credit if they have children who meet the eligibility requirements.
3. Contributing to retirement accounts: Contributions made to retirement accounts such as a 401(k) or an individual retirement account (IRA) are tax-deductible. This can help reduce a person’s taxable income and thereby reduce their tax liability.
4. Timing capital gains and losses: Capital gains and losses can impact a person’s tax liability. It may be beneficial to time the sale of capital assets in a manner that reduces the overall tax burden. For example, if a person has a loss on a stock, they can sell that stock to offset gains in other areas.
5. Hiring a tax professional: Sometimes, it can be beneficial to hire a tax professional who can help identify additional ways to reduce tax liability. A tax professional can also help ensure that a person’s tax returns are complete and accurate, thereby avoiding potential penalties.

It is important to note that tax laws and regulations are complex and subject to change. Taxpayers should consult a licensed tax professional for personalized advice and guidance. It is also important to keep records of all deductions, credits, and other tax-related information in case of an audit.