Tax Relief...
EVERYONE wants it!!
Tax relief - this subject can be a very complicated matter. No one expects you to be a tax guru, but you should at least understand some of the basic concepts of how our tax system works.
Note: First, before I go any farther, let me say that I believe everyone should pay their "fair share" of taxes, nothing more! This is not, in any way, an effort to teach you how to "cheat" the tax system...instead, this is an effort to teach you how to use specific, Congress approved, tax breaks to reduce your taxes to the legal minimum.
Because of it's complexity, most people don't even try to learn some of the most basic tax relief principles, concepts most average people can use if they just take a little bit of time to learn more about them.
I know you probably think this subject is super BORING, but you MUST learn some of the basics to take control of your financial life!!! (See Tax Saving Tips & Techniques for the Average Person below...)
Let me explain...
I was casually talking to a friend of mine recently who was in the process of having his tax returns prepared. He had worked for part of the year, and had been unemployed for the last half of the year.
As part of our discussion, he said, “David, I need all the tax deductions I can get! I’m afraid I’m going to owe!”
I asked, “Why do you think that?”
He replied, “I didn’t have any taxes withheld from my unemployment checks because I needed all the money I could get to live on!”
After probing a little further, I asked him if he owned his house, was paying off a mortgage, or was just renting.
His reply, “Nope, I don’t own my house, I just rent. Rent, rent, rent!”
Finally, I asked, “Do you have your own home based business or a health savings account?”
His answer, “Nope, neither!”
So I thought to myself, “How in the world does this guy expect to come up with a bunch of tax deductions for his tax return? And where in the world would he record these deductions? He doesn’t do anything to enable himself to qualify for tax relief!”
Fortunately for him, his wife had a significant amount of taxes withheld from her paycheck, more than making up for his shortfall. Of course, they were disappointed that they “only” got back about $1,000, instead of their usual refund of $3,000-$4,000 each year.
I tell you that story, because this is often the case with so many people.
Now, their situation may not be exactly the same as yours, but I would venture to guess that the following two scenarios describe probably 90% of the average person’s tax situation:
- You earn a wage at a job and rent a house or apartment to live in.
- You earn a wage at a job, but “own” a house and therefore have tax deductible mortgage interest and real estate taxes. Plus, you probably have some charitable contributions thrown in here and there.
Although I don’t have concrete scientific evidence, I would venture to say that one of these two scenarios is the tax situation for most average people. In addition, most of you probably have a significant refund coming back to you every year.
I’m continually amazed at this…the number of people who don’t have any idea whatsoever how our tax system works, nor do they understand the value of money.
Now I don’t expect everyone to be a tax guru, for goodness sake, our tax code is unbelievably huge and no one could possibly understand every single item in it. But I would hope that people would at least have some idea what’s going on with their tax situation and their money.
Through this letter, and the pages that follow, I will provide several sources of tax relief that most average people can do. I’m not talking about reverse triangular mergers or real estate investment trusts, I’m talking about some simple tips and techniques for the average person.
Tax Saving Tips & Techniques for the Average Person
- Try to purchase a home to live in…quit renting.
- Even with less than perfect credit, you still may be able to purchase a home.
- First time homebuyer refundable tax credit of up to $8,000.
- Look into a health savings account.
- If possible, contribute to your 401(k), IRA, or Roth IRA.
- If possible, pay off credit cards with a Home Equity Loan or a Home Equity Line of Credit.
- You may want to change your tax withholdings to REDUCE your tax refund...What?!?
- And my favorite...An absolute "MUST DO" in my opinion...Start your own home based business! Something that interests you!!
With the above tips, you can start taking control of your finances and your life, and start experiencing some tax relief!
WARNING: Everyone’s tax situation is different. All of these tips and techniques are intended as a general outline to work from in generating tax relief, as well as starting to take control of your overall financial life. Please follow these in conjunction with competent legal and accounting professionals of your choosing. If you need help finding a competent legal or accounting professional, I will be happy to help you find one. The information in this website should not be considered tax, legal, accounting, or other professional advice to the reader, as all readers’ tax , legal, and accounting situations are different. Readers of this material must seek their own competent advisors in the areas discussed herein in order to assure proper implementation of the ideas outlined herein.
To Your Success...
David Jesse, Your Fellow Average Joe