August 4th, 2009 5:03 PM by Korene L Clopine-Seaman
SET FOR LIFE A SPECIAL CONFIDENTIAL REPORT
10 Ways To Save Big Money On Your TaxesThat Your Accountant May Not Have Told You!
The BEST time to do tax planning is now NOT in Febuary, March, or April. Your professional tax planner and advisor is not rushed or hurrying for his next appointment, either. GET the best TAX PROFESSIONAL YOU CAN FIND. For goodness sakes do not do this on your own or with the advice of a computer program or your neighbor's cousin's nephew's girlfriend's brother's best friend the family has known since the first grade.
Have You Ever Felt More Aggravated With Our Tax System?
You cannot pick up a paper or watch TV, without seeing another story about budget deficits, cuts in spending, and the worst news of all:
More Increases To Your Taxes!
Yet, the answer, government always seem to come up with to the economic mess we're in, is to take more of our hard earned dollars. We should all know this is still the greatest place on the planet to live and work. As messed up as we are, there is no other country that can compare with the opportunities we have. And that's why it feels so bad when we see our incentives to earn, save and invest being taken away
I remember things I learned as a kid. They were in my history book. They were from a time in our past. When the public took a stand. When they had had enough. When they realized that the powers that be were interested in a different agenda. One of endless, unfair taxation. From which a famous slogan was derived:
Taxation Without Representation!
Think about it. This was the rallying cry that our nation was formed on! Yet…we have somehow let ourselves fall back into a situation where we once again have tax monsters that are thrust upon us without or agreement or consent! It is truly taxation without representation.
For example, let's look at the list of taxes we all have to pay: 1. Federal income taxes. 2. State income taxes. 3. Local income taxes. 4. Sales taxes. 5. Real estate property taxes. 6. Personal property taxes. 7. Ad valorem taxes. 8. Gasoline taxes. 9. Import duty taxes. 10. Sin taxes. (Cigarettes, booze, etc.) 11. Travel taxes. (Hotel, airline, etc.) 12. Excise taxes. 13. Highway taxes. 14. Death taxes And on and on and on.
Not only does the list of taxes keep getting bigger, the rates keep getting bigger as well. Any time a governmental body finds themselves in a fix due to mismanagement, their answer is always the same: Raise Taxes! After all, they won't notice. We need the tax revenue to keep things going. Everybody has to pay their fair share! Right. Give me a break. Let's talk about paying your "fair share."
Is any of this fair? No, it sure isn't. But, then, my dad always told me that life wasn't fair. That I would have to learn how to become "street smart" and find the best way to live my life. On my own. The world doesn't care about your own personal situation. You won't get any medals for being successful. And you won't get yelled at for failing. All you will get is whatever you make your life. On your own. And what we are really talking about here is one of the most powerful notions of our lives. A word that is so important, yet one that often seems to elude us.
What am I talking about? Control! Or, in other words, the power to determine your own destiny. Control. An emotion that we all want. That we all need. You see, the lack of control makes us feel like we cannot guide our lives the way we want to. Not being in control is scary. It is disturbing. It can be very disappointing. There are so many areas of our life where we do not have much, if any, control. Which can cause us to feel a loss of peace of mind. For isn't being in control, really one of the foundation corner posts of happiness and peace?
When you know you can steer your life in the direction you want, don't you enjoy each day a little more? Don't you sleep better at night? Don't you have the freedom to love your family just a little more? Sure you do. That is why we all strive to work so hard. To gain more control. And yes, having more money does provide more control. As the old saying goes, "Money cannot buy happiness, but it can sure rent it for a while!" And paying less in taxes, puts more money in our pockets, which puts more control in our lives!
Yet, when you look at the long list of taxes we all have to pay, I want you to notice an interesting fact: Of all the taxes we are stuck with, only a couple of types are really controllable! Most of the items on the list are either built into the prices of things we pay, or applied as a percentage of the value of something. If you want to buy some beer, you will pay the sin and sales taxes, without any option to get around them. If you want to go on a trip, you will pay the airline, hotel, car rental taxes, with zero say in the matter. And so on.
There are a couple of interesting exceptions to this "pay without choice" rule. As a matter of fact, these exceptions are so big, that the fact they even exist is truly amazing. What am I talking about? How about some of the biggest taxes you have to pay both during and after your life? Yes, Federal income and estate taxes!
Let's look at a little bit of background here before I get to the specific methods of reducing these taxes. As you probably know, these taxes have been around for a long time. And the way we are taxed on them keeps changing like the weather. You see, originally, they were established to increase revenue to the US Treasury across the board. But, then, they were manipulated to encourage (or discourage) certain behaviors. For example, builders want us to buy houses, and eventually the Congress put a tax break in the code for deducting the interest we pay on a mortgage.And so on.
Congress uses the taxation of our income and estates as a "carrot and stick" to direct our financial lives. In the seventies, during the recession, they added a tax credit for hiring new employees. They increased the tax savings for businesses who buy new equipment. Etc., etc. So, since they use these taxes to push us one way or another, a very interesting result has been created:
Income And Estate Taxes Can Be Significantly Raised Or Lowered By The Way You Arrange Your Financial Affairs!
Think about that. It is incredible. You can literally decide how much in estate and income taxes you pay, based on decisions you make with your money! And, you can do this 100% legally! (Make sure you understand that all wI am suggesting is following the tax laws as they are written! I will NEVER suggest or advocate that you do anything that isn’t 100% legal!) There isn't any other area of taxation that allows you such flexibility. Or that can cause you so much grief, if you set yourself up wrong. And, yes, you can set yourself up the right way, much easier than you think.
But, first, let's define the "right way." Well, my definition of "the right way" is paying the least amount of taxes of anybody you know in the same income bracket! Yes, that's right, two families can have the exact same income, and one can pay way less in taxes. A lot less. Let me give you an example:
Al and Kathy earn the same amount of income as their in-laws, Dan and Mary. They both have houses in the same price range, in the same neighborhood, and have the same number of kids. They work for the same company, and have the same company benefits available to them. As a matter of fact, they are the same in almost all respects, except for one. Al and Kathy pay several thousand dollars less than Dan and Mary in income taxes! That extra money has been used for years to build up enough money to pay for their children's education. And to buy all kinds of investments. And to go on nice vacations. And so on.
Dan and Mary have no idea how they will pay for college. Or retire. Or reach any of their goals. How can this be? Well, it is because Al and Kathy have taken advantage of the tax laws and Dan and Mary have never bothered! They thought they were too busy. Or that the IRS would hang them. Or that the loopholes weren't for them. Or a thousand other excuses. But you know what? Excuses don't put money in your pocket. Careful planning of your finances to reduce the taxes can put money right where it belongs... in your possession!
So, what kinds of things did Al and Kathy do? How about: (NOTE- THESE STRATEGIES DO WORK. HOWEVER, YOU MUST NOT RUN OUT AND DO ANY OR ALL OF THEM WITHOUT PROPER TAX COUNSEL FROM A QUALIFIED TAX ADVISOR! IT WILL BE NECESSARY TO COORDINATE ALL OF YOUR FINANCIAL ISSUES TO MAKE SURE YOU ARE MAKING THE RIGHT MOVES. TAX PLANNING CANNOT BE DONE IN A VACUUM. YOU MUST TIE TOGETHER ALL OF THE PIECES OF THE PUZZLE!)
1. They took a hard look at their company benefits, and found out there were almost ten choices that they had to make. And by making the right choices, they were able to save big money on their taxes. Some of the opportunities they discovered involved the proper use of their 401(K) deductions, the medical, life and dental insurance "cafeteria" options, their stock purchase plan, expense reimbursements, and so on.
There are literally dozens of tax breaks that employees can take advantage of, through their company benefits. Most people choose the options that their co-workers choose, as they discuss these issues over lunch. Or, they pick the benefits based on a "quick and easy" selection while watching the news before they go to bed. And, then, the booklets that describe all the choices get put in a drawer, and never again see the light of day .
This is a big mistake. It is amazing how much money in taxes is flushed away because most employees eyes glaze over at the thought of picking these choices. The books sound very complicated, and many times the explanations provided by the company are poor, at best.
The best answer is to coordinate your benefit package with your other personal finances. If you choose options based on "getting it over with", it is like choosing a medicine from your cabinet based on whichever one is in front, and easy to get to. You may not waste any energy, but you might not get well either!
2. They took advantage of the tax savings from using IRA's. Now, many people think you can't do IRA's if you have a retirement plan at work, and that may or may not be true, depending on your income. But, either way, using IRA's is an excellent way to defer taxable income on the earnings in the account.
One of the big myths about IRA's is that there is no way around paying a penalty if you take the money out before age 59 1\2. Not necessarily true. Did you know there is a loophole that allows penalty-free withdrawals before that age? Yes, it exists, and almost no one knows about it! If you annuitize (take annual distributions) over a minimum of five years or until age 59 ½ whichever is longer, the penalty is eliminated! Do you think this time frame may help, over a period of years with something like college funding? (Kind of interesting, isn't it? Let your college funding investments grow without taxes, and then use the money without penalty!)
3. Home financing. With the elimination of many tax deductions, your home may still be an excellent tax shelter. All it takes is some planning to determine what is the proper amount of mortgage to have, and then by maximizing your interest deductions, you will save considerable taxes.
For example, when you buy a new home, all the interest up to a one million dollar mortgage is deductible. When refinancing, only an additional $100,000 of equity may be used to create new tax deductions. Let's take a look at what would happen if you refinanced and added the interest deduction of an extra $100,000 mortgage. You would have $7,000 in new deductions (assuming an 7% interest rate) which would save you as much as $2,170 in taxes!
Kathy and Al refinanced their home several times over the last decade, had a big equity position, and have saved thousands in taxes! Of course, don't forget there are all kinds of variables that need to be addressed BEFORE YOU MAKE ANY FINANCING DECISIONS!
4. Overpaying withholding taxes is a big mistake. Let's look at an example: Kathy and Al, being good students of tax reduction, have set themselves up to save $4,800 in taxes for this year. If they kept their withholdings at the same level, they would get a big, huge refund next year. This "loan" they would be making to the IRS is free of interest, and would cost them several hundred dollars of interest that they may never see.
On the other hand, by changing their withholdings, they end up getting $400 per month extra take home pay, NOW, which they can invest somewhere to get interest instead of giving it to the IRS! It is a big misconception that you cannot increase your exemptions on your W-4, without getting the IRS all over your back. You are allowed under the law to only withhold the amount of taxes you expect to pay. Actually, as long as you end up within 90% of your final liability, you won't even get a penalty when you pay the balance with your return! Never, ever give the IRS money that is yours. Never be afraid of doing what the law allows!
5. Tax credits. Most people are familiar with tax deductions, which are expenses you can write off against other income, to reduce your taxable income. However, many people are not aware of tax credits, which are much better than deductions. Actually, they are incredible, because they reduce your taxes dollar for dollar! First Time Home Buyers, here is $8000. if you do things correctly and on time.
Let me explain. If you get a deduction of $8,000. let's say on a mortgage, it will save you about $2,400 in taxes. (Assuming a 30% average tax bracket.) If you had a $8,000 tax credit(s), you would save $8,000 in taxes! These credits, then, can be as much as three plus times better than deductions of the same amount!
There are several types of credits, such as child care, earned income, rehabilitation, low income and affordable housing, elderly credit, and so on. They all have been entered into the tax code to give certain groups, or types of expenses, a tax advantage. If you don't get all the credits you deserve, you may be overpaying!
6. Real estate. People mistakenly believe that owning various kinds of real estate will not help them out tax wise. That is simply not true. Real estate still offers all kinds of tax breaks which include (but are certainly not limited to): A. Use of losses up to $25,000 against other income. (Under certain circumstances.) B. Deferring gains on personal residences, and exchanges of investment property. C. Renting to family members. D. Offsetting taxable income. E. Tax credits. F. Vacation properties.And so on. The list of creative tax savings that can be achieved with real estate is surprising. The IRS, and some of the popular press, have made it seem that all is lost with real estate as a tax savings item. Not true at all! What has disappeared, is the highly leveraged, risky real estate deal, that was designed to do nothing but lose money.
Now, the first and foremost desire, is to make money, and shelter as much tax as possible while doing so. This area of tax planning is not simple, so caution must be used every step of the way. (As is true with all tax planning!)
Our friends have carefully implemented a few buildings, on a positive cash flow basis, with major tax advantages!
7. Tax advantaged industries. Yes, the insurance industry is a tax haven, and will always be likely to have some special laws around, just for it.
You can spend time wondering why, or you can use their heavily favored status to your advantage! Just like Kathy and Al. Most products sold by life insurance companies allow either tax deferred or tax free treatment of your invested dollar, with some of the lowest risk factors around. (CD's and treasury bills may be the only lower risk items that we are aware of, but they don't offer the tax advantages of insurance products.)
There are tax deferred annuities, cash value insurance plans, and variable annuities. All have tax deferred status, and cash value life insurance, can actually allow tax free withdrawals! Not all these products are the same, and you should make sure the person you are dealing with works with sound institutions. Assuming that is the case, you will be amazed at how much extra money you may end up with, down the road, by not paying taxes as you go!
All these investments have very unique positions in the tax laws, and should be investigated at every opportunity.
8. Charitable giving. We have explained charitable giving strategies to people who had not been inclined to give before, we showed them why they should become givers. People who were previously inclined to give, become bigger givers! Why? Because, the Congress has to encourage giving from the private sector, and there are many opportunities to reduce your taxes, while helping needy religious or social organizations at the same time. Talk about a win-win story! Most people, like Kathy and Al, think of charitable giving as leaving a bag of clothing to the Salvation Army at your front door. Yes, this is a form of giving, but certainly only the tip of the iceberg when it comes to using the tax code to enhance the recipient's and your position!
For example, there is a strategy that allows you to sell assets that have gone up in value, without paying any capital gains tax! Yes, you heard me right. No taxes! Here's how it works. Let's say you bought some stock in a company several years ago for $1,000, and because of your wisdom in purchasing the stock, it is now worth $100,000! If you go to sell the stock, you would pay somewhere around $30,000 in taxes. If you correctly utilized a charitable remainder trust, your tax could be as low as ZERO! (Or, a savings of the whole $30,000!) Not too shabby. As a matter of fact, the entire amount of money you saved in taxes will be available for you to invest for income. How about that? Sound interesting, or what?
By the way, this law has been around forever, and almost no one takes advantage of it. Why? Beats me. But, now you know, so keep it in mind.
9. Starting or properly utilizing a small business. Let me tell you that the tax savings that may be realized from a small business are possibly the best shelter ever. And I am not talking about some big enterprise, although that's fine too. If you have a business, my guess is that you are still overpaying your taxes. (Yes, even with your accountant.) Over the years, I have been able to save lots of tax dollars for my business clients, by being proactive instead of reactive! Most business tax preparers are used to answering your questions, instead of telling you what you should be asking!
Anyway, whether you own a business now, or are thinking about it, you can't beat all the tax breaks allowed for business. If you want to start a little enterprise out of your home, you can take advantage of the same tax breaks that Fortune 100 companies can use! As long as you make an effort to make money in three out of five years, you can use all of the business tax savings items, with great joy. Kathy and Al changed their entire life by starting a business. Other folks who already have a business, are making the business tax breaks work for them as hard as they do for themselves!
A very brief list of tax savings opportunities include (but are not limited to): A. Tax free loans. B. Retirement plans. C. Deferrals of income, and speeding up deductions. D. Deductions for insurance, and other benefits for you and your family. E. Travel and entertainment. F. Education, expense and other reimbursements. G. Automobile use for the business. H. Deductions for businesses run out of the home. I. Tax advantaged income from leasing to your business. J. Transferring income to family members K. Deducting "start-up costs." L. Increased use of certain tax credits.
And on and on and on! I could fill a library with all the advantages you have as a taxpayer who happens to own a business. Why not fill your own library with all the tax savings ideas for your family?
10. Careful planning. THIS IS REALLY THE GREATEST SECRET OF ALL!!!
Most of you do not plan for your family's finances, the way you even plan a vacation or a trip to visit your mom. Those activities are planned very carefully. When you will leave. What you will do before you go. What you will bring with. How you will get to the airport. What you will do with your bags. Which seats to take. What time you arrive. Renting a car. Etc., etc. DO YOU TAKE THE TIME TO PLAN FOR YOUR OWN FUTURE IN SUCH LAVISH DETAIL?? I think you probably do not. Be realistic with yourself.
Yet, this planning makes the difference between arriving at your destination, happy and excited, or having no clue where you are, or even where you want to be! This last secret may not sound as interesting as the others, because it requires more mundane tasks, but,
IT IS ONE OF KEY WAYS OF BEATING THE BANKER, THE IRS, AND EVERYONE ELSE WHO IS AFTER YOUR MONEY!
Bill and Sarah were shaking their heads as they left the accountants office. "How come we never seem to get anywhere with our taxes?," asked Sarah to no one in particular. Bill was still shaking his head as they got into the car. "You know, I swore that we would get a handle on it this year, and we just let the whole year go again!," Bill mused.
Sarah replied, "Well, we had a lot to do last year, and we have a lot going on this year, too! I hope we can find the time to get things on a more even keel."
"Yeah, I know," said Bill. "But, you know we have to run up to school next month for Larry's graduation. And Leslie will be coming back from her trip right after that. Oh, yeah, your mom is going to need help with that addition on her home I promised her. I almost forgot about that!"
"You did forget that Gerry's coming in for a visit after Labor Day. You know we have to show him a good time after the divorce and all."
"Geez!" Bill exclaimed. "I also know the company is going through that restructuring, and I'll be out of town a lot. I talked to Jim, and he said that our group would be real busy coordinating the new division."
They drove away in silence, both of them lost in thought. They were thinking about how busy they would be, and had already started to commit a terrible sin.
BELIEVING THAT THEY WERE TOO BUSY TO REDUCE THEIR TAXES!
You know, there is a saying that is very true for Bill and Sarah: (As well as most Americans)... They are so busy earning a living, that all they will have, is just a living! And they will continue to overpay their taxes. Year after year after year!
I'll bet you don't have any doubts why.
This little story exaggerates a point, yet not really by that much. Bill and Sarah's only problem was that they did absolutely no tax planning. Their agenda was carried out by a tried and true American formula:
PUTTING OUT WHATEVER FIRE IS THE HOTTEST!
Not the ideal way to manage your life, is it?
As a matter of fact, those who have taken the time to plan, are more likely to have more money than those who don't plan. Especially when it comes to taxes. Planning regularly, and often, is your best weapon. It really is!
Al and Kathy, our tax savings experts, found that planning turned their lives into a cottage of comfort. Warm, safe and devoid of panic and confusion. It's a nice little place to be.
I'll bet you feel the same when you open that door and walk in. It isn't that hard to get to this home. All it takes is some knowledge and a little bit of effort.
Just like it takes to make your house a home! And in order to get into this house... you need to have CONTROL! Control of how you arrange your money....
To Keep The Tax Man's Greedy Little Hands Out Of Your Pocket!
If you feel like the government has the control over you, that can be fixed very quickly. But, the initial step must be yours. Taking that first step into a new life of lower taxes is really all up to you.
Just by the fact that you have read this report, I'll bet you are curious. Curious to see if you can do something to gain the control back. That's great. Curiosity is always the mother of new directions, and new-found freedom!
If any of this makes sense, you probably have some questions. Maybe lots of them. That is good! If I have stimulated you to think about this, then I have done my job!
Now it's time to do yours and get with a qualified tax professional who can help you pay the least amount in taxes you legally can! (AGAIN, DO NOT TAKE ANY ACTIONS REGARDING YOUR TAXES WITHOUT FIRST GETTING ADVICE FROM A QUALIFIED TAX PROFESSIONAL! REMEMBER, WE ARE ONLY ADVOCATING THAT YOU HIRE A QUALIFIED TAX PROFESSIONAL WHO WILL ADVISE YOU ON 100% LEGAL TAX REDUCTION STRATEGIES!)
I AM NOT A TAX PLANNING OR ADVISING EXPERT. I am a top notch financial mortgage and interest expert. I would be pleased to help you get the best mortgage possible and or help you get out debt sooner than you think, and you don't rob a bank, print funny money, take a second job, get rid of the kids or change your financial budget but you do save yourself and your family thousands and even hundreds of thousands of dollars of interest and debt payments. Email me or call me and I will be pleased to help you.
DISCLAIMER – NOTHING IN THIS REPORT IS TO BE SUBSTITUTED OR TO BE CONSTRUED AS FINANCIAL, LEGAL, OR ACCOUNTING ADVICE, OR ADVICE OF ANY KIND. THE INFORMATION CONTAINED HEREIN IS SOLELY INTENDED TO BE INFORMATIONAL, AND NOT TO BE CONSTRUED AS ADVICE OF ANY KIND. THE READER ASSUMES ALL RESPONSIBILITY FOR ANY FINANCIAL, LEGAL OR ACCOUNTING ACTIONS THEY TAKE, AND UNDERSTAND THAT THE READER MUST CONSULT WITH THE APPROPRIATE PROFESSIONALS BEFORE TAKING ANY ACTIONS REGARDING THEIR FINANCIAL, LEGAL OR ACCOUNTING SITUATION. THE READER HOLDS THE AUTHOR, PUBLISHER, OR ANY DISTRIBUTORS OF THIS REPORT HARMLESS FROM ANY CONSEQUENCES THAT RESULT FROM ANY FINANCIAL, LEGAL OR ACCOUNTING ACTIONS THE READER TAKES UNDER ANY AND ALL CIRCUMSTANCES.