Nothing can be truer than the old adage that states that the only two certain things in life are death and taxes. We certainly would love to avoid both, but doing so would bear nothing but futile results.

There are certain ways to prolong life and enjoy its perks ahead. But right now, we’re not going to delve into any mystic and medical theories on prolonging life. Our main concern now is how to ease the tax burden that each of us is always complaining about.

Just why are we taxed? How much tax should we pay the government, and how do we legally minimize the tax we are paying to the government?

The government imposes tax on just about anyone who takes home any legitimate income. Why? The tax money that goes into the government’s treasury is spent on things necessary to run the country and subsidize all its basic needs, like the building of roads, public schools, hospitals, shelters and wages for those who work on the government. Income tax, an imposed contribution to the legislative authority, is a percentage of our income that is deducted by the IRS as our tax contribution.

Each taxpayer belongs to a tax bracket, depending on the income he makes and his tax-filing classification. Each tax bracket has a corresponding tax rate that ranges from 10% to 35%. For illustration purposes, if you belong to the 10% tax bracket and you make $11,000 annually, your due to the government is $1,100. That’s quite a lot of money. However, it is very interesting to note that, while the government gives tax shelters to big businesses, not all individuals know that they, too, have the same privilege.

A tax shelter, by the way, is the legal method a taxpayer can use to reduce the money he pays to the government. Why is the government allowing tax shelters? In business, for example, to encourage more investments, the government may reduce the tax on new corporate properties. This results in sizeable tax savings and extra cash that businesses may use to reinvest in their operations. This creates new jobs, thereby creating more income for workers. As more individual income is generated, more taxes are being collected. It’s actually a win-win scenario.

Yes, tax shelters are not only for big businesses. But beware. The government is taking a close look on how each taxpayer is using the available tax shelters. Many are abusing these tools in order to totally avoid paying taxes. Ironically, doing that may instead cost them huge amounts in taxes and penalties in the long run.

So, how do you legally minimize, or at least defer, the taxes that you pay to the government?

Investing a portion of your earnings in any legal and financially gainful instruments, such as bonds, mutual funds, retirement accounts or life insurance, not only gives you an opportunity to defer or even reduce your tax dues, but they also give you an opportunity to accumulate wealth.

Take the case of municipal bonds. Proceeds of the sale of municipal bonds are used by local government units to fund public works projects such as highways, construction, repair of public schools, etc. When you purchase a municipal bond, you earn a fixed rate of interest on your investment. The interest gained by your investment is not taxed by the government.

Mutual funds are also great for deferring tax payments to the government. As your fund earns dividends, you can opt to reinvest the dividends back into the fund, increasing the value of your investment in the fund and decreasing the tax on your taxable gains (tax on any income earned through the fund).

There are other legal means that you could take advantage of to decrease or defer your tax payments. It is best to consult with a qualified tax advisor or check out the IRS’ website at http://www.irs.gov for more information.