As I write, this morning, its already been a long cold winter and we have had more than our share of snow. With four feet of snow on the ground in Bangor we are forecasted for a second blizzard on Sunday and another two feet. Winter is only half over and it just feels like we have no control and we are at the mercy of “another power”. At this point we only can hope the greater power will allow us to live. THAT’S how people often feel about there tax return!
The IRS is unappreciated for its incredible sales positioning over the years as they have done an amazing job making people feel the way we are about the snow right now but about their tax returns and tax outcomes.
Of course just like preparing for winter the snow does not need to be overwhelming. You can keep an extra shovel, have studded tires on your car and own a long handled snow roof rake. Chemical hand warming pouches for inside your gloves are everywhere and 99 cents. You can also board a plane at Bangor International Airport any morning and be in Florida for lunch, so you are in control if you prepare or react. The same is also true of your Tax burden. You can prepare and or react or both and have an incredible amount of control over your Taxes.
If you`re self employed you can keep a “deduction diary” and keep good records of your deductible mileage. Its a surprising fact that most people UNDER REPORT the deductible miles they drive each year because they aren’t keeping daily records and they underestimate at the end of the year. Also learning to “Live in your corporation or schedule C business” can put thousands of your own dollars back in your pockets and is often not done as the tax payer feels like the Tax due is the snow out the window and its just “gonna come whatever it is.”
If you didn’t keep good proactive records that you can react instead. Making larger gifts to charity and not just of cash but old office equipment or other items you`re not going to use. Sell stocks that are currently lower in value that what you paid, don’t worry you can buy the ETF equivalent if you don’t want to wait 30 days to repurchase them. Open IRA`s, SEP`s or other retirement accounts to rake off 10,000+ of taxable income right off the top of your taxable base. BE in CONTROL!
Treat your taxes the same as you would winter. Of course you cant change that the event will happen but you can prepare and react and make the affect on you… what you want!
The Tax What-if Doctor;-)