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post #1 of 10 (permalink) Old 05-19-2006, 01:23 PM Thread Starter
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Best way to reduce taxable income?

I had to pay this year for the first time in a while. What to do when you get to that magical tax bracket that screws you with no lube every year? I am not talking about crazy amount of money here, I ain't Donald Trump. Keep it simple as I am quite stupid.

People always say buy a house (property). Why is this always the recommedation? Is there no other way to significantly reduce it?
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post #2 of 10 (permalink) Old 05-19-2006, 02:00 PM
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cuz the interest is tax deductable

come next tax season, get a good CPA - if he/she knows their stuff, they can save you tons of money

keep track of your mileage, claim a 'home office', have a few kids...

depending on what you do, you can incorporate and save some money too


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post #3 of 10 (permalink) Old 05-19-2006, 02:11 PM Thread Starter
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cuz the interest is tax deductable - i see

get a good CPA - thought i had one, maybe i need to call him now to plan instead of just around tax time

keep track of your mileage - can i do this? i don't have my own business
claim a 'home office' - same as above
have a few kids - #1 on the way!

you can incorporate and save some money - again, not running my own business but i am thinking of freelancing again

thanks for your help!
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post #4 of 10 (permalink) Old 05-19-2006, 02:17 PM
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a 'good' cpa will give you tips throughout the year so everythings legit

depending on what you do, you may be able to deduct mileage to work, from work, or the round trip

again, depending on what you do, if you use your home computer even once, you have a home office - you can write off the depreciation on your computer, desk, chair, etc. You might even be able to deduct your cell phone usage if you use it for work

corporations' tax structure is completely different from regular peeps so you'll have to talk to your cpa about that one. basically you pay taxes on what you dont spend rather than what you earn


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post #5 of 10 (permalink) Old 05-19-2006, 02:19 PM
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depreciation on your vehicle (again, depends on what you do) is deductable too


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post #6 of 10 (permalink) Old 05-19-2006, 05:58 PM
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the amount of money you save by purchasing a house on your taxes is more than offset by the amount of property taxes you will pay, not to mention the amount of money you will spend to maintain a house.

Any good financial advisor will tell you there is only one reason to buy a house.
To live in it.

If you live in it long enough (and this usually is 10+ years) it will appreciate enough that you will have equity built in during a sale.
However, the housing market throughout the UNited States is seriously posed for a fairly large bursting of the bubble.
California and Florida are already seeing this and it is slowly making it's way to the midwest.

With the increase in gas prices. many people are having to sell off houses at bargain prices so that they can move "back into" the city and this is causing a major depreciation of the middle class and upper middle class housing market.

personally, if you need to really find tax deductions, then you need to sit down with a good financial advisor as well as with your accountant.

there are many things that can be done to lower tax liaqbility, however they are not necessarily good things to do for your long run.

like IRA's.
People always jones about putting money away pre-tax, yet they dont realize that come the time they start removing that money, they are going to be taxed then, not only on the money they put into it, but all the money they made from interest.

A better idea is to put after tax money into a Roth IRA nad then all the money you earn in interest is complketely tax free when you remove it....

so many people worry about getting the most money now, when in fact they should be more concerned about how to have the most money later.....


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post #7 of 10 (permalink) Old 05-19-2006, 10:32 PM
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budha hit the nail on the head. roth ira is great...don't claim a home office or a car unless it's ONLY used for business...you're also going to raise your chances of being audited by a TON of you do that.

there isn't really a way around paying taxes that is agood way other than a business as you can claim expenses before you get your net income and pay taxes on that. you have tos how an income though or you'll raise a lot of red flags also.

bad taxes are short term capital gains in the stock market...under a year gains=50% are taken for taxes that sucks ass


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post #8 of 10 (permalink) Old 05-20-2006, 09:17 AM
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I will say that I have claimed a home office for the last 7 years, but then again, I actually have one.
The great thing about a home office, is that if you are a computer person, it is really easy to do. Esapecially if you have remote access to what you work on (I do).
The other thing about a home office is that it is very easy to increase it's square footage.

All offices must have a restroom. so you can claim not only the office size, but the bathroom and any hallway needed to traverse between the office and bathroom.

Also, if you purchase any "equipment" for use on the home office, you can claim that as well.

Lastly, if you are op call, you can claim any mileage that you do as long as you fulfill one requirement; you must call them back BEFORE you leave your house. Then you have established that you are working, and once you have begun to "work", than all mileage can be recorded and deducted.

And nowadays, mileage deductions are very lucrative sionce they are at a higher and higher rate due to the increase in gas prices.



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post #9 of 10 (permalink) Old 05-20-2006, 07:25 PM
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I also use the home office as a tax deduction since I frequently use my computer, etc, to work on protocols, research, etch for my job. Commuting miles are only deductible IF you travel from one job directly to the other job. So, I get up, check the latest research (about 5 minutes worth) at home (thereby I have worked at job # 1), then leave for my "real" job (#2). That way, I can deduct the 115mile one way trip. Since I do the reverve as soon as I get home, I can deduct 230 miles per day.

That will work out to about a $12-13K deduction next year.
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post #10 of 10 (permalink) Old 05-21-2006, 01:30 PM
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Quote:
Originally Posted by Sundown
I also use the home office as a tax deduction since I frequently use my computer, etc, to work on protocols, research, etch for my job. Commuting miles are only deductible IF you travel from one job directly to the other job. So, I get up, check the latest research (about 5 minutes worth) at home (thereby I have worked at job # 1), then leave for my "real" job (#2). That way, I can deduct the 115mile one way trip. Since I do the reverve as soon as I get home, I can deduct 230 miles per day.

That will work out to about a $12-13K deduction next year.
uhhhh

that's "technically" illegal....

you gave to start work at job #2 before commuting to it. Not a completely different job.....

hence the reason if you are on on the road salesman that starts from home, you ALWAYS call a customer before leaving for your first call/ Otherwise you cannot claim the mileage from home to the first call.

Also, if you are to travel to a client/customer before you actually go to the office, you do the same thing.

otherwise, you can be in a world of shit if you get audited....


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