Tax Tips from a Certified Public Accountant
The Tax Relaxer has developed several tax tips that we believe will help all our clients with their personal finances, retirement planning, tax planning, etc. If you have a question on any of our tips, we encourage you to contact us! We have loved the questions we have received so far and promise to continue to respond to every question you send!
✓ Go to school
✓ Buy a house (that you can afford)
✓ Have kids (when you are ready)
✓ Donate to charity
✓ Start a business
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I’ve mentioned in blog posts in the past about how the government has created incentives to certain activities that are socially responsible. If you donâ€™t spend your hard earned cash on things the government wants, they will tax you for it. As much as 39% of it! It doesnâ€™t take a math wizard to find out that adds up quickly.
If you invest in socially responsible things such as the list described above, that money will go towards benefiting your life instead of the greater good (the greater good is good, and I encourage everyone to donate to charity so that you may help the greater good in a manner that you dictate)!
Tax Tip #1 – SAVE
Our first tax tip is to save for the future. This first tip works well on a few fronts. Open up a Roth IRA. Whatever you put in there will grow tax free and when you take it out, the interest earned from both interest and principle isnâ€™t taxed either.
Tax Tip #2 – HOUSE
Buy a home. Most of us rent right now, but for only a little bit more (especially in the very moderate cost of living Oshkosh, Appleton and all of the Fox Valley and Wisconsin really) you can own a home. This will give you a retirement nest egg and give you incentive to take care of your house. Pride in ownership! Owning a home will also drastically reduce your tax liability. There are a number of tweaks you can do when you have a home to further reduce your liability, and if you ask I will gladly share them.
Tax Tip #3 – SCHOOL
Get educated! There are nine different credits and deductions you can utilize by enrolling in higher education. I received my degree from the University of Wisconsin at Oshkosh. I racked up some student loans, but I also received many tax benefits along the way that offset the burden. Here is an important question: would you rather pay a college for education, or pay the governmentâ€¦ to not?
Tax Tip #4 – KIDS
Have kids! Of course wait until you are ready, but if you are on the fence; think of those little hellions as a deduction that could save you thousands on your tax liability each year!
Tax Tip #5 – BUSINESS
Have a good idea? Make a business out of it! Chances are you arenâ€™t the only one who thinks your idea is a good one. Do a little research, and make your vision a reality. In doing so you will feel much more fulfilled while you work and youâ€™ll be saving a bundle in taxes. One of the beauties of being your own boss is receiving a 1099 rather than a W2. You can deduct costs against a 1099. You do not have the same benefit with a W2! If starting a business intimidates you, I will gladly help you do it!
Tax Tip #6 – CHARITY
Give to charity! A lot of what the government spends our tax money on is charity; benefiting the whole of our society. If you disagree with where some of the money goes, then give your money directly to where you think the most need is. This amount can be deducted from your tax liability!
This list is to get you thinking about â€˜social responsibilityâ€™ and lowering your tax bill; or raising your tax refund. Ask me a question, or fill out our tax quote, and I will make sure you are taking advantage of every deduction and credit out there that pertains to your tax situation.
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- Kevin McMullen, Founder