Looking for some smart ways to help reduce your taxes? Here are a bunch of helpful methods to assist you in reducing your taxable income. These are great tips to use throughout the year when opportunities arise. When planning large purchases or gifts, get into the habit of thinking about how your taxes may be impacted as well. Medical bills - Save receipts for medical bills, prescriptions and co-pays if you are not using a health savings account. You can take a deduction that will lower your tax liability, if your medical expenses exceed more than 7.5 percent of your adjusted gross income (AGI) Beginning in 2013, medical expenses must exceed 10 percent of your AGI before they can be deducted. Invest in a retirement account - You can make a maximum contribution of $17,000 to your 401K account annually. In 2013, you can stash an additional $500 for a total contribution of $17,500. Investing in retirement savings can lower your tax liability by giving you a tax credit. Buy a house - Paying rent does not provide you with a tax benefit. Owning a home not only means you are building equity, it also lowers your tax liability because mortgage interest is a tax deduction if you meet the income requirements. Make a charitable donation - Tax free donations are a great way to help an organization or individual in need and lower your taxable income for the next income tax season. Make an extra mortgage payment - Your home mortgage payment is likely the biggest monthly expense in your household. Use your income tax refund to make an extra payment, or two! Making one extra mortgage payment every year could reduce the lifetime of your loan by up to five years. Pay your property taxes - Real estate taxes are tax deductible. If your property tax bill is due early next year, you might want to pay it now and take the deduction. Avoid the gift tax - By giving $13,000 or less per year per person you can avoid the gift tax. In 2013, the amount is $14,000. Gifts over that amount will reduce your lifetime gift tax exclusion, and gifts over the exclusion will be taxed to the giver. Not using Taxbrain yet? Visit Taxbrain.com today to create a FREE account and receive unlimited technical support!