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iDumb
March 8, 2016, 09:40 PM
Any accountant in this site? I want this thread to become all the creative ways to reduce your tax liability. I am obsessed with this.

I will post some of the most common ones in a bit after I finish cooking by Beef curry.

icricket
March 9, 2016, 12:59 AM
Not an accountant. But recently I've become a little obsessed with tax returns in general. It's really a fascinating subject for me at the moment. :)

iDumb
March 9, 2016, 01:28 AM
^icricket, me too.. I think I have read enough of it past week to do taxes for 50% of ppl situation :p and will have some of the BEST RETURNS.

Anyways here are some of the big ways to reduce tax liability:

1) if you get w2 - 401k contribution max 18k.
if you get 1099 or have own business, then you can contribute to solo 401k/Sep IRA max 53K <-- way better. Technically you can do both have a w2 and work as an independent contractor - in that case you can actually COMBINE both the contributions.... but one has to be Sep while other 401k.

2) Buy a house, live and rent it : Deduct all interest paid to it as well as property tax. This is one of your biggest deduction.

- you can deduct rental loss of 25K but low AGI limit of 100k <--- ( you can however bring down your AGI to this with step 1)

3) Open up a business, create a business bank account, run through all expenses through that for you business and you have deductions of 100% of cost. Can deduct your rent if you it is a home business.
- Hire your relative, and deduct those payroll expenses.
- From your business take salary but also take profit distribution - which is taxed at a much lower rate than income

Really having small business or working as independent contractors has extraordinary benefits compared to w2s. No wonder all the yellow cabbies of the 90s are currently multimillionaires and live in the best places in my hood.... they paid zero taxes :p

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For lower income, taxes are very easy , as a lot of benefits are phased out on certain income...lot of returns. Earned income credit, child credit, saver credit - Lot of gifts of uncle same. For higher incomes you have to get your creative juices flowing...

any more great ideas.. please share.

mufi_02
March 9, 2016, 02:36 PM
Student loans interest payment are deductible.

Also if you paid tuition out of pocket, then there is another credit. Last year, I paid for grad school and got some credits.

Zeeshan
March 10, 2016, 07:30 PM
Pay for brain respiration exercise classes. You get refund.