Tax time has already passed and many people do what they do every year and they forget about it until next year around March when they start stressing about it. I have decided to share with you throughout the year, tax tips that will help you accomplish something that all of us want; pay less taxes. After 20 years in the industry as a CPA and business advisor I want to share with you how you can accomplish that. I invite you to follow this blog and share your thoughts and email me any questions you may want us to talk about.
Please keep in mind that the intent of the blog is to be general and that for specific tax/wealth planning you must seek professional help. This blog is not intended to replace proper professional guidance. However, you will find valuable tax and personal finance information that will help you gain a better understanding of the matter. I will be addressing the topics in simple terms to help all of the readers to be able to gain from these readings.
Our tax system is overly complex. This is one of the reasons that most people go every year paying more taxes than they should and not receiving the proper guidance since most tax preparers are not properly educated to advice their clients in how to save money. Tax planning is for everyone, it is not exclusive to the rich. Our tax system is so complex that unfortunately distorts investment decisions of most. Over the years, I have seen how many individuals have made poor investment/business decisions due to the lack of understanding of taxes or poor advice. Some of the decisions many of them make are motivated to save taxes, but they are more like tax avoidance schemes or in the borderline of that. Here you wont find tax schemes or avoidance techniques. My goal is to share with you how you can comply with the tax law and minimize the tax liability impact.
To many the word "Income Tax" and "IRS" may either cause their whole body go into a convulsion or simply dance in front of their eyes in a meaningless procession. It does not have to be that way, it is not that complicated and it is what we will accomplish through our posts in this blog. This blog is not to bash our government nor any political party. It is intended to bring to the people the power; the power of information. If you believe that the power of a government resides in the people then stay tune gain knowledge that you can apply and improve your wealth. Remember that knowledge by itself is not power. Knowledge in its own is just information in your hard-drive. When you apply the knowledge then you have power.
Today, I want to conclude my posting by addressing one question that has been brought up many times. Is is legal? Is the tax system in the United States legal. The answer is simply, yes. I know that you will see many posting in the Internet that disagree with me and will guide you in the path of tax avoidance and will try to prove to you (for a fee of course) that it is illegal for US Citizens to pay their taxes. The tax code has been referred to as a "remarkable essay of sustained obscurity...a conspiracy and restraint of understanding". The tax code is legal, our responsibility is to learn it and use it in our favor.
Did you know that for the tax year of 2008, taxpayers received $257 BILLION dollars in tax refunds. That represents $257 BILLION dollars of free tax loan to the IRS. Assume a conservative interest rate of 5%, that is almost $13 MILLION dollars in lost interests. Do you know what we can do with $13 MILLION dollars? That is the danger of our ignorance of the tax code, moneys that we overpay and that at the end of the year the IRS graciously will return with no interest to you.
Did you know that after inflation, the US government collected TWICE as much income tax revenues in 2001 as it did in 1981. Did you know that the IRS sends approximately 10 MILLION correction notices and that 50% of them are wrong? Did you know that the paperwork received by the IRS would circle the globe 36 times (lets talk about killing trees).
Time is money and these dollars we are talking about here come from YOUR POCKET and drain your family and your ability to save and invest. We need to stop wasting our time trying to fight with our government if our tax code is legal. We must gain an understanding of how our tax code works and avoid overpaying unnecessary taxes. Tax planning is a must for all of us, not just the rich. Stop using cheap tax preparation programs and cheap tax preparers. Your goal must be toward reaching paying zero taxes and this is doable, all it takes is planning. The reality is that you pay too much in taxes, and it costs too much for you to do your tax returns.
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