How To Pay Fewer Taxes Legally

taxes

Tax season is around the corner which means it's time to take your wallets out of your pocket and hand them over to the IRS (Internal Revenue Service) but luckily there are some ways to legally pay less money in taxes. I'm not advocating hiding your money or lying to the IRS, no, there are provisions in the tax code that allow you to pay less money in taxes.

In this article, I am going to go over the 4 things that you can do to pay less money in taxes. You might not get to take advantage of all the things that I'm going to talk about in this year's tax cycle, but you should consider doing them now, that way you can take advantage of them next year because taxes aren't going away



2. Start A Business

I've talked about this in one of our recent articles 5 Reason Why Getting a Job Is RISKIER Than Starting A Business
but the United State is changing the way that they tax small businesses. While you won't see the effect of these changes until it's time to pay your 2019 tax bill, you have to start making the changes now, that way you can actually realize these effects and take advantage of them when it's time for the next tax cycle.

Right now if you have a small business you're good to reduce your taxable income through a handful of deductions because the tax code says you can, but with the new tax plan you should be able to get bigger write-offs next year

Now, I'm not going to go through all the details of the new tax plan in this article but essentially if you have a small business pass-through entity like an LLC or an S corporation, you will be able to get a larger standard deduction next year and you will be able to depreciate certain assets faster than you could before, or in plain English you should be entitled to more deductions

The best part is you don't need to be making a ton of money to take advantage of these deductions even if you work a full-time job and you have a side hobby that pays you here and there, you can still qualify as long you classify it as a business.


2. Net Your Gains

If you've been invested in the stock market for the last few years there's a good chance that your portfolio is in the green, meaning you made a profit, so good job. Well, when you see your stocks or any other investment for that matter, you have to pay taxes on the money that you made, but you can offset some of your gain or your profit if you also have a loss of the same kind and you sell that losing investment during the same year

Now, if you think that that losing investment is going to be profitable later on and you don't want to sell it right now, don't do it, this is just a tax strategy, but if you do plan on selling both stocks or both investments, you can offset some of your gains by selling the loss during the same year

Let's say you've been invested in the stock market for a few years and you've made a $10,000 profit with stock A, and at the same time you had a $2,000 loss with stock B

Now, if you plan on selling both of this stock then you should sell them during the same year, this way you can offset some of your $10,000 profit with the $2,000 loss, this way you only have to pay capital gain taxes on the $8,000 of the net profit.

Which you don't want to do is sell stock B for a loss on the December 15th and then sell A for a, gain, on January 15th just a few weeks later because these are two separate years and you might not be able to offset them

Like always i am not an accountant and i don't know your personal situation so you should always speak to an accountant and an attorney in your area so you understand all the local laws and regulations and so they can come up with the best tax plan for you.


3. Stop Paying IRS More Than You Need To


Something like 80% of American taxpayers overpays on their taxes. 8 out of 10 people, if I was selling you a notebook for $10 and you gave me $20 and told me to keep the change, I'd be very grateful, but you don't get to give me $20 if it's on sale for $10, and I get it the IRS tax code is thousands of pages long so for you to know every single deduction that you're entitled to unless you're a tax expert so you should hire a tax expert to help you


4. Pay Your Taxes On Time

When you don't pay the IRS on time they don't really get upset at first, they just slap you in the face with a huge late fee. If you don't file your taxes on time the IRS will charge you 5% a month in fee every single month that you're late up to 25%, that's more than most credit cards, and if you still don't pay the IRS after getting all these late fees then they'll keep knocking on your door and they'll either force you to pay or they'll throw you in jail

Your 2017 tax returns are due by April 17th to put it on your phone, write it on your computer, your calendar, put it wherever you ought to put it so you make sure that you file them on time because if you keep racking up these late fees pretty soon you won't have any money left to your taxes.



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Author:

Hi, i am Micheal, the guy behind Roadtosuccesse. I share tips and tricks to help take a business to the next level, show which systems I personally endorse and use, share what I learn as a student of the game, and help people with personal development so that they can reach their full potential.

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