What’s your biggest monthly expense? Your house payment? – Not even close. Rent? – Nope. Car Payment? – C’mon are you driving a Lamborghini or something?
Your biggest monthly payment is (drumroll please)…. your taxes!!! Think about it. every paycheck you earn you pay Federal Tax, Social Security Tax, Medicare Tax and in some states State, City and County Tax. Add to that – sales tax, excise tax, registration tax, “user fees”, licenses, food and beverage taxes, hotel taxes, cigarette and other “sin taxes” – Own a small business? Then you also have “the honor of” matching your employees Social Security and Medicare Tax. Now do the math. Approximately 45 – 65% of your income is going to pay your taxes!!!
Doesn’t everyone want to make more money without having to work hard for it? Forget the lottery. The chances of buying a ticket and winning are almost the same as the chances of not buying a ticket and winning. Save your dollar. Late night infomercials tell us you can get rich quick by simply using their Ponzi scheme. “Just send us $1,000 – it’s so easy” they say. Don’t fall for it. If it was so easy then everyone would be doing it.
So, what can you do to have more money without having to work for it? Or as we say in the CPA/Accenting world, it’s not what you earn that matters, it’s what you get to keep that counts.
If you earn a dollar, given what you just learned above, you will keep somewhere between 35-55 cents. Not so great. Yet if you reduce your taxes by a dollar – you get to keep a dollar! What would you rather do?
There are a plethora of tax breaks and tax advantages the IRS has set up for us and we never use them. For example, are you an Adoptive Parent? If so, did you take advantage of the Adoption Tax Credit? By the US Treasury’s own estimate 60-80% of Americans that adopted a child last year failed to utilize the credit. That credit is worth over $10,000 folks! That’s $10,000 in your pocket!!! Are you a school teacher? Did you take advantage of educator expenses, tuition, and student loan interest? Investment in IRA’s, Roth IRA’s and other retirement vehicles? What about the child tax credit? Own a home? How about interest and Real Estate tax deductions? Excise taxes on your vehicle? Donations to charity, unreimbursed employee expenses, safe deposit boxes medical expenses and of course the cost of your CPA. These are but a few mere simple items to save you money.
Those of us old enough to remember the Beatles will certainly remember their hit song “The Tax Man”:
“If you drive a car I’ll tax the street,
If you try and sit, I’ll tax your seat,
If you get to cold I’ll tax the heat,
If you take a walk I’ll tax your feet.
….’cause I’m the Tax Man! Yeah the Tax man!”
So how do you beat the taxman at his own game, and keep more of what you earn? Well there are three basic rules when dealing with the IRS: Document, Document, Document.
It starts by finding yourself a good CPA. Ask about their qualifications and experience. Look for the CPA designation. Don’t be fooled by the “fly by night” organizations that open on January 1, and close on April 15th. Stay away from gimmicks and gadgets. Choose a CPA that is open year round, one that will work to get you all deductions possible. One that plays the game in a fair manner, but plays TO WIN. Any good CPA should pay for themselves by asking the right questions, and getting the most deductions and credits available for your situation. If your CPA or tax preparer (or even software) is costing you more than you are getting in tax benefits, then it’s time for a change.
Call us for more information. We’re here for you, and are glad to help
Leo Titone MBA, CPA
CPA Tax Advisors
12995 S Cleveland Ave Suite 210
Fort Myers, FL 33907