Date: September 8, 2020
Loopholes aren’t illegal or discriminatory, anyone can use them.
Part of my job as a tax strategist is to help business owners and individuals minimize their tax burden. Every dollar you don’t spend in taxes gets reinvested into your local economies and personal accounts. Those dollars are much more powerful when YOU get to decide how they are spent, as opposed to writing a check to the IRS to spend as they see fit.
No matter what income level you are at, the tax code is littered with incentives and loopholes intended to help you save money. The trick is that they are written in super sophisticated and technical ways to overwhelm and confuse the taxpayer. Very few taxpayers make it through and actually leverage most of the opportunities available to them.
I’ve dedicated my entire career to saving people money in taxes, because frankly – it’s not fair. They won’t tell you when you’ve overpaid, but they’ll sure be in touch if you underpaid (without the right paperwork and checkmarks). So below are some easy-to-implement tax loopholes for every income bracket.
Low-Income Earners: Use your credits! Low-income earners are more likely to receive refundable and nonrefundable credits than middle and high-income earners. Refundable credits will increase your refund, whereas nonrefundable credits will reduce your tax liability (or eliminate it in some cases). These are loopholes meant to incentivize education, savings, and help parents.
Middle-Income Earners: Know your deductions! The middle class is often stuck between a rock and a hard place because they make too much to be considered low income, but make too little to benefit from the wealth strategies of the rich. The best loopholes for the middle-income earners are the mortgage interest deduction, itemizing expenses as opposed to taking a standard deduction, and taking advantage of the lifetime learning credit. Investing in homeownership and continuous learning can save you thousands on your tax return!
High-Income Earners: Use your interest strategically. There are many ways to offset passive income if you do it strategically. Renting your home for 15 days or less, netting capital gains, and rolling over investments can save more than you’d expect for the higher income earners. Part of being wealthy means you’ll pay more in taxes than any other income bracket if you’re not careful. Just because you make more doesn’t mean you should have to pay more than your fair share – invest in the services of a financial professional to ensure you are maximizing the power of every dollar.
If you’d like a complimentary tax assessment I’d be happy to offer you a 45-minute tax review to see if you’re overpaying and what changes you can make to pay less.