3 Tax Tips you WON’T want to Forget

When it comes to “Tax TIme,” the solution to saving the most in taxes is the importance of planning ahead. It is very hard to rely on a few “last minute” tips to really save much of anything on taxes. So with that in mind…the number one most important tax tip is to create a plan.

TAX TIP #1 – Create a Plan

Creating a plan will give you a head start in the coming years to really get ahead of the game and will alleviate the need to do things “last minute.”  To get started, the plan should include becoming a “Super Tax Payer.” The one thing you want to avoid is being an “average tax payer,” in order to be sure to improve your ability to save more money from the “tax man.” The reality is that if all of your income is coming from a W2 type paycheck, you really don’t have many tax saving options. You have the choice of a standard deduction or be able to itemize and get a deduction for mortgage interest, (if you own real estate), and charitable giving.  But the options are very limited. 

Here is a little diagram from the book, Tax-Free Wealth by Tom Wheelwright. 

The US tax system is set up with incentives to help those who help the government. What the government wants and needs are business owners to hire people and create jobs. So, the tax system is set up to incentivize business owners and investors. 

In order to move from average to above average, I recommend becominig an investor. This means saving and investing money. You don’t have to quit your job, just start educating yourself to become a better investor. You’ll start by simply saving and investing each week. Every week you buy a business by buying the stock of some of the greatest companies in the world. In time, you’ll start buying more and then, maybe someday, you buy a full standalone business. (You may even consider building your own business). At Clarion Advisors, that is what we are all about. We love to help people save and invest for a bright future. 

TAX TIP #2 – Keep Good Records

If you are ready to step up your game and become better than average, you have to include setting up good systems to keep records. This could include accounting software like QuickBooks, or some other system to regularly record your transactions and keep them categorized. In other words, to become a better tax payer, it means becoming better at keeping records. Sounds strange but it is true.

From tiny seeds grow oak trees; the habit of becoming a good recordkeeper is the only way to eventually grow an investment portfolio as strong as an oak tree. 

TAX TIP #3 – Find Help you can Trust 

If you’re feeling overwhelmed and unsure about what to do, find someone who knows how to solve the problem. Many people get stuck in the do-it-yourself trap. There are times when it is far more effective to hire a professional. I’m not saying always, but there are times when it makes sense. For example, if you are facing lots of changes in your life, your tax status is also likely to change. 

Following these 3 tips will help you to FOREVER get on the right side of using the US tax code to your advantage.