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Any creative ideas for reducing tax burden?

Posted on 8/2/15 at 5:48 pm
Posted by DzNtz
BR
Member since Oct 2007
684 posts
Posted on 8/2/15 at 5:48 pm
I recently started a new job where there is tons of overtime potential. I was wondering if there are any ways to reduce my tax burden after maxing out 401k.

Quick info: married, wife's 401k will be maxed by the end of the year, new baby

Are there ways to start funds for my daughter to help? Thanks for any insight. Pretty new to having to worry about such things!
Posted by BlueYoda
Member since Jul 2015
70 posts
Posted on 8/2/15 at 5:55 pm to
HSA, IRA, 529, real estate, start a small business...



Posted by TheHiddenFlask
The Welsh red light district
Member since Jul 2008
18384 posts
Posted on 8/2/15 at 6:31 pm to
Buy a farm. You can then expense all of your hobby items.

You won't be able to perpetually lose money, as the IRS would catch on, but you can make very meager profits while generating strong net cash flow.
Posted by jimbeam
University of LSU
Member since Oct 2011
75703 posts
Posted on 8/2/15 at 7:50 pm to
That's the plan
Posted by Creamer
louisiana
Member since Jul 2010
2817 posts
Posted on 8/3/15 at 7:43 am to
Do you have any links to places to read up on this. We have a large piece of land that we do not currently produce on, but I am interested to see what we would need to produce to qualify as a farm.
Posted by StarSaint
lafayette
Member since Nov 2006
7490 posts
Posted on 8/3/15 at 8:13 am to
Two quick suggestions...

1)Read "Tax Free Wealth" by Tom Wheelwright. I just finished this book last week and he has some excellent tips for reducing your tax burden.

2)Make sure you have a solid tax advisor. Someone with years of experience and can understand your income situation thoroughly.

Hope it helps!
Posted by Iowa Golfer
Heaven
Member since Dec 2013
10230 posts
Posted on 8/3/15 at 8:19 am to
quote:

You can then expense all of your hobby items.


I wouldn't suggest this.
Posted by Cdawg
TigerFred's Living Room
Member since Sep 2003
59525 posts
Posted on 8/3/15 at 9:17 am to
quote:

We have a large piece of land that we do not currently produce on, but I am interested to see what we would need to produce to qualify as a farm.

Plant some pines and become a tree farm. You'll have to look up state by state what's required to qualify.
Posted by Hawkeye95
Member since Dec 2013
20293 posts
Posted on 8/3/15 at 11:13 am to
Buy a house?

Cheat on your taxes?
Posted by TheHiddenFlask
The Welsh red light district
Member since Jul 2008
18384 posts
Posted on 8/3/15 at 12:16 pm to
Four wheeler
Guns
Ammo
Mud boat (depending on property)
Lawn mower
Vehicle (at least partially)
Insurance
Fuel

The list goes on. All are legitimate farm expenses.
Posted by Iowa Golfer
Heaven
Member since Dec 2013
10230 posts
Posted on 8/3/15 at 1:16 pm to
Farm expenses? Or hobby farm expenses? Not that it makes a large amount of difference to the IRS if you don't turn a profit about 2 out of every 5 years. Even then they can come in a say passive income, hobby related and disallow everything.

All I'm saying is that one needs to be careful expensing out properties/investments that are largely designed to reduce ordinary income tax burden.
Posted by yellowfin
Coastal Bar
Member since May 2006
97645 posts
Posted on 8/3/15 at 1:21 pm to
I'm on year 5 of loss after you add in depreciation, that bonus depreciation was the shite
Posted by TheHiddenFlask
The Welsh red light district
Member since Jul 2008
18384 posts
Posted on 8/3/15 at 3:54 pm to
You obviously have to be careful, but all of the ones I mentioned in my previous case are more than likely legitimate. You need all of them for farming. Using them on the side for fun is not something they are going to be able to prove.
Posted by Iowa Golfer
Heaven
Member since Dec 2013
10230 posts
Posted on 8/3/15 at 4:18 pm to
I don't play games with the Feds. I've seen too many people made an example. I worry a lot about one property I have as it always loses money. The tax code is fairly ambiguous here. But long story short, a rental, or any property or investment not making money is defacto a passive income stream sheltering ordinary income, and ordinary income taxes. It's a red flag, and one better be able to prove they were at least trying to make income.

I tend to be very conservative as you can tell from my writing naked options, and other extremely conservative money strategies.
Posted by TheHiddenFlask
The Welsh red light district
Member since Jul 2008
18384 posts
Posted on 8/3/15 at 4:24 pm to
I'm definitely not suggesting an income shelter, I'm just suggesting an investment hat will require a lot of the things you buy anyway and don't deduct. There is a significant difference.

There is a materiality threshold with the Feds. It's kinda like going 5 over the speed limit. There are enough people going 15+ over that there is no need to waste resources on some moderately ambiguous things.
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