How You Cheat Yourself on Taxes
Tax time rolls around and what do you do? You complain about the amount of tax you pay to the federal and state government. This is a time honored tradition among Americans, but you might be surprised to learn that some of the fault is your own.
The tax code is big and complex. This goes without saying. That doesn’t mean, however, that the code doesn’t contain sections that can help cut your tax bill at the end of the year. So, should you go hunting through the code looking for those tax saving nuggets on your own? Not unless you are a sadist!
A far better choice is to find a good accountant, a quality CPA. A good CPA is going to be able to analyze your financial and personal life and put together a plan that is going to minimize your tax liability each year. The key to getting a grip on your taxes is primarily one of classification and money movement.
Let’s assume you get paid $60,000 a year. In which scenario are you going to end up with a smaller tax bill? One, you take the full $60,000 as income. Two, you put $10,000 into your 401k and take the remaining $50,000 as income? The answer should be obvious, but note that nothing “sneaky” was done. Money was just move from one classification to another.
A good CPA can use any number of strategies to help you cut taxes. Instead of giving your kids an allowance, you might end up paying them as employees. Instead of saving for college with a savings account, the CPA might recommend a tax protected program. The possibilities are nearly endless, but only so long as you actually take advantage of them. If you are not working with a tax professional, you really have nobody to blame but yourself.
Thomas Ajava writes for TaxLawyersDallas.com – where you can locate tax lawyers in Dallas, Texas.
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