Financially successful people often pay high income taxes. Reducing taxes can go hand in hand with making wise life decisions
Instructions
- Study tax law each year. Read IRS publications, particularly the 1040 instruction booklet, and articles about new tax laws
- Have your tax return prepared by an expert every three years or so if you normally do your taxes yourself.
- If you have your taxes prepared for you, either see a different, experienced tax prepare every few years or make a list of questions to ask during the off-season and while being interviewed
- Keep and organize receipts and documents for investments, property, business and employee expenses, mileage, donations, medical bills, and casualties and other losses
Buy and Put Away
- Purchase a home
- Purchase rental property
- Put the maximum amount allowed into a retirement account
- Put up to 100000 each year into a traditional IRA if you are not covered by another retirement account at work or if your income is below the IRS limit
- Put up to 100000 each year into a spousal IRA if your spouse is not working or is not covered by a retirement plan at work
Plan Ahead
- Be aware of deadlines for making retirement contributions at work and for opening up retirement accounts for the self-employed
- You have until April 15, the deadline for filing the past year's tax return, to make an IRA contribution
- Estimate and plan any medical, dental and eye care costs and payments for the upcoming year if your employer offers a medical benefit.
- Estimate for the upcoming year and pay during the tax year for child and dependent care if your employer offers this benefit
- Have taxes withheld or make estimated payments if you receive gains from sales, prize winnings, bonuses, spousal support, unemployment compensation or other significant amounts of income
- Track purchases, reinvestment of dividends and sales of stocks.
- Keep records of property and investment purchases, sales and improvements
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