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Started By
Message
Minimizing Tax Bill
Posted on 4/26/24 at 10:59 am
Posted on 4/26/24 at 10:59 am
We maximize 401k. I don't contribute to an IRA. Last year was the first year our Mortgage Interest dipped enough that we can't itemize anymore. I did a rough calculation on our Federal Income Tax for 2024 and it's going to be close to 72,000. State income tax will be around 18,000. Property tax 9,000. Makes me sick knowing we are spending 100k on taxes.
So what are some creative ways to start shielding money (legal of course), and get that tax liability down.
So what are some creative ways to start shielding money (legal of course), and get that tax liability down.
Posted on 4/26/24 at 11:17 am to Boss
quote:
Boss
Pay your employees more.
Posted on 4/26/24 at 12:38 pm to Boss
If you are W2 income...there are limited ways to shield.
Posted on 4/26/24 at 1:04 pm to Boss
My wife and I are both high W2 wage earners. There isn’t much you can do about that.
The tax code is written to benefit the ultra rich. Real estate, interest, corporate borrowing. There are a lot of ways to use money to make more money at low tax thresholds.
We have been building up money for several years and have started to buy and build rental properties. We alone created a holding company for our property.
We still eat it on the annual earnings but we hope to use that money way to make more money at lower rates.
The tax code is written to benefit the ultra rich. Real estate, interest, corporate borrowing. There are a lot of ways to use money to make more money at low tax thresholds.
We have been building up money for several years and have started to buy and build rental properties. We alone created a holding company for our property.
We still eat it on the annual earnings but we hope to use that money way to make more money at lower rates.
Posted on 4/26/24 at 2:53 pm to Boss
Have more withheld from your check.
Look at HSAs
Give more than the standard deduction to charities.
Look at HSAs
Give more than the standard deduction to charities.
Posted on 4/26/24 at 3:08 pm to Boss
Sorry to hear about your $385k in taxable income.
On a serious note, maybe look into muni bonds for any of your taxable investment/savings accounts. At least you’ll keep more of your interest that way.
The only real way to make your taxable income go down as a W2 employee is to lose money somewhere else, at least on paper.
On a serious note, maybe look into muni bonds for any of your taxable investment/savings accounts. At least you’ll keep more of your interest that way.
The only real way to make your taxable income go down as a W2 employee is to lose money somewhere else, at least on paper.
Posted on 4/26/24 at 8:01 pm to Boss
If you are W2 it is quite difficult.
With the increased standard deduction and SALT cap it is definitely much harder to justify itemizing. If you do donate a decent amount to your church or charity that can get you over and help some.
If you have kids many (most) states allow a state deduction for 529 contributions. In LA it's $4,800 per kid and can be done even with standard deduction.
HSA (if you qualify) can be another decent option. It's triple tax free if you use for qualifying expenses.
From a pure tax standpoint, that is pretty much it. As a high earner you get phased out of the child credits and everything else.
If you want to get into real estate that can open some new avenues, but not as many as people thing. To actually POTENTIALLY lower your tax burden you would either have to have a real estate professional status or dedicate a majority of the time (I think it's like 200 hours a year) to short term rentals. The benefit here is that in the scenarios any loses are considered active and you can deduct them from your regular income.
The problem with the above is that you end up letting the tax tail wag the dog.
The simple answer is that for most people there is not some magic, hidden tax break. Unfortunately, if you make a decent living you are going to pay a hefty sum in taxes.
If it makes you feel any better our tax bill was $304k last year....
With the increased standard deduction and SALT cap it is definitely much harder to justify itemizing. If you do donate a decent amount to your church or charity that can get you over and help some.
If you have kids many (most) states allow a state deduction for 529 contributions. In LA it's $4,800 per kid and can be done even with standard deduction.
HSA (if you qualify) can be another decent option. It's triple tax free if you use for qualifying expenses.
From a pure tax standpoint, that is pretty much it. As a high earner you get phased out of the child credits and everything else.
If you want to get into real estate that can open some new avenues, but not as many as people thing. To actually POTENTIALLY lower your tax burden you would either have to have a real estate professional status or dedicate a majority of the time (I think it's like 200 hours a year) to short term rentals. The benefit here is that in the scenarios any loses are considered active and you can deduct them from your regular income.
The problem with the above is that you end up letting the tax tail wag the dog.
The simple answer is that for most people there is not some magic, hidden tax break. Unfortunately, if you make a decent living you are going to pay a hefty sum in taxes.
If it makes you feel any better our tax bill was $304k last year....
Posted on 4/26/24 at 8:27 pm to Boss
You can use I bonds as an emergency savings vehicle. No tax on interest until maturity. Don't go crazy on savings you are likely getting taxed on interest at your marginal tax rate plus a surcharge of 3.8 percent and state taxes so if you have excess savings you might as well use it for something you need or want or find a tax deferred vehicle that is not so hard to get to for the larger amounts of cash. I had over 4 K in interest on savings and got hit this way this year. Will use a chunk for a new roof and HVAC system in the next year or two.
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