Ever wonder how to not pay taxes? It's definitely possible to reduce your tax bill, even to zero. But how?
What if I told you that I haven't paid federal income taxes in nine years? No withholding, no yearend tax bill, nothing. I've definitely worked, definitely earned a great income, but my federal income tax liability remains zero.
How's it possible? Aggressive tax planning.
It both is and isn't easy. First, it isn't some last minute action at the end of the year. Clients who call in December wanting to do something to reduce their tax bill for the year have missed the opportunity to really plan out their savings. There is very little that can be done in the last month of the year, but there are a few things. To learn more about last minute tax tricks, click here. But if you're interested in long-term tax planning strategies, just keep reading.
How to Not Pay Taxes: Step One
Talk with a tax advisor.
As much as you want the complete answer available here online, it isn't that simple. Every client's financial situation and goals are dramatically different, and it's these two things that determine what strategies will work best for you. For example, a W2 earner is much more limited in what they can do to mitigate their taxes. The strategies that work for a small business owner simply won't work for the W2 earner. The strategies that work for a single filer aren't the same as for married filers. And the differences between total income, type of income, available cash, purchasing power, current retirement planning, your financial goals, and so much more make all the difference in how you can reduce your tax bill.
What Are Some Examples?
Aside from the traditional IRA contributions or a business making a large purchase at the end of the year, there are other more complicated tax strategies to consider. These sometimes involve utilizing different entity types for your business, real property purchases both inside and outside of certain entity types, and much more. We look your individual situation to determine what will work best for you.
Tax strategies often include:
- Moving income into lower tax brackets by splitting income among family members or legal entities
- Shifting income and/or expenses to different tax years to lower your rates
- Deferring tax liability through deductible investments
- Avoiding tax liability through deductible investments
- Increasing your tax deductions by purchasing recreational or pleasure items that qualify
- Planning to take advantage of refundable and non-refundable tax credits
How to Not Pay Taxes: Step Two
Stick to the plan.
Tax planning requires a detailed plan that fits your budget. We help you develop both.
To learn how to not pay taxes, we help develop the right plan and personal budget or a complicated business budget you need. We will talk with you about your financial goals, then we will take what you tell us you want to achieve and put it to paper. With strategic tax planning and budgeting that makes sense, we make sure you're maximizing tax savings to help be able to invest and live as you want. We aren't here to change your lifestyle, we're here to help facilitate the changes you tell us you want to make and to use as many tax savings as possible to get there.
You set your financial goals; we help make them a reality.
Our Expert Tax Advisor
Christopher Olson, EA focuses on helping our clients with tax planning. With years of experience, Christopher has produced tremendous savings for our clients and demonstrated personally the benefits of intricate tax planning. Christopher often says, "The tax code is designed to incentivize you to spend your money in different ways, many of which create passive revenue streams, improve your quality of life, and help plan for retirement. Why would you not want to take advantage of the government giving you free money in the form of tax savings to do things that better your life?"
With an impressive résumé of business building and tax mitigation, including nine years as of this article of zero personal tax liability and being a partner in two other large, successful companies, Southern Bay Realty and Surfside Services, Christopher is our resident expert in tax planning and business consulting.