For a government to grow, it needs a happy, growing population. This population needs work for income. Some things that help create a strong environment for growth include: home ownership, education, protection, procreation, creating business (and in doing so, jobs!) and philanthropy. To encourage these activities that promote the health, wealth and happiness of society, a government will put an incentive on such acts. This incentive is in the form of lower taxes.
There is an army of IRS agents and government workers preventing “quick tips” to avoid taxes, but they are out there. If you own a home, you can deduct any interest you pay on the loans you needed to get the home. You can also deduct any taxes you are required to pay to own the home. In the realm of education, which creates more intelligent citizens, the government will allow you to deduct any payment for such education.
Protection in the form of protecting yourself can be deducted, through payments to insurance or to yourself in a retirement account. For a government to survive, it needs a base of citizens, and the more the better! There are many credits and deductions to help people properly develop and education the future of our society. Creating businesses, and subsequent jobs, is an excellent way to make your 1040 look more tax-friendly. The government needs jobs creation, and in the worst way! Jobs help citizens create better lives for themselves in every other category I’ve mentioned. Lastly, philanthropy is helping the greater good. Giving to those who need it more than you is a wonderful thing, and the government promotes it through deducting these payments.
For those of us who want those quick (and some not so quick!) fixes, here are a few:
1. Invest in a retirement fund. Any IRA or 401k will have benefits to it and research the specific one that works best for you, but any that you take will have great benefits. These benefits will better your future. Not to mention they will also reduce what you pay in taxes.
2. 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 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.
3. Get educated! There are nine different credits and deductions you can utilize by enrolling in higher education. Would you rather pay a college for education, or pay the government… to not?
4. 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!
5. Have a good idea? Make a business out of it! Chances are you aren’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 you’ll be saving a bundle in taxes. If starting a business intimidates you, I will gladly help you do it!
6. Give to charity! A lot of what the government spends our tax money on is charity; benefitting 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! When donating, make sure it is a qualified charity! The ones that are will make it very clear that they are.
This list is to get you thinking about ‘social responsibility’ and lowering your tax bill, or raising your tax refund. Cheers!
Kevin
