Do the math
So, it's tax time again, and again I am furious. Apparently, the federal and California governments believe that we make too much money. Unfortunately, 'too much money' is not enough to buy a house in Los Angeles, so we get royally screwed every April 15th. We are a family of three; my husband claims 1 on his W4, and I claim 0 AND have extra money taken out! I would love to go Galt, but I really do like my job. (I get to fight the looters!). I am seriously wondering if I should asking company to reduce my pay. Does anyone know the math formula? Is there some 'magic number' that will keep us from feeding the looters, but not so much that I become one?
But, moving right along from the irrelevant digression to your question, the best suggestions are the ones below -- start your own business, take yourself out of the employee/required monthly/quarterly tax withholding morass, and build your own small Atlantis.
expenses
There are however a number of writeoffs that could be taken if contractor status is established. As an example, if you have at least 2 vehicles financed, by incorporating and placing the vehicles in the corporation, the interest would be deductable like the old days over 25 years ago. Since the first 3 years of auto financing is mostly interest, this could be a serious deduction.
I would be happy to provide further information.
Fred Speckmann
Once I had a lawyer offer to send me patients if I would say what he wanted. He said I could charge up to $2000 for X-rays and exam (normal fee at that time was about $105).
a normal response to opportunity!!! -- j
These states also have no state income taxes:
Alaska, Washington, Nevada, Wyoming, South Dakota, Texas.
In addition, Tennessee and New Hampshire don't tax wages, but do tax interest and dividend income.
Fred Speckmann
Spend money on things that have rebates. If you spend money on an electric car, you get a looter-rebate...but it is actually a refund of some of the money that has been taken away from you in taxes.
Buy a house, even if there is a commute. I am not a tax savant, but I have always heard that a house is a tax advantage. If there is some way you can arrange for at least some of your house and car to be a business expense, do so.
Once you have a house, get solar with batteries. (This is in the first category - but you need the house first.)
There are definite breaks in payscale, but often these are also linked to corporate medical coverage (which you do not want to loose). Back in the 1980's, when there were more steps in the payscale, I found a spot that allowed me to keep my medical coverage but was below the IRS break point. Working 34 hours a week, I made the same amount as my co-workers who worked 40 hours, when taxes were taken into account.
Good luck.
Jan
PS I live about 15 min NW of Magic Mountain...
Your original question was 'what was the magic number'. If that is the only option left for you, hire a good tax adviser and do what you can.
Jan
Some where in there I began drawing social security. Again followed the rules as exactly as I could figure them out which wasn't easy. Different every year.
A few months after paying off the back due was completed I got a check for around $100 more than what I had paid in. This was for not using the correct formula and paying too much on the social security share of income tax! I don't know what it will be this year for taxes. It's never the same and there is no crystal ball for planning ahead.
The point is the government giveth and taketh and you never know except one thing. Sign the bottom of that form and you commit a felony.
Nowadays no signature is required it's just complete the annual form and send it in. There is NO WAY anyone can sign the bottom of that form and be truthful.
The purpose of income tax is not raising revenue. it's all about controlling the population especially those who work for a living. Another reason to be against the flat tax or any additional Value Subtracted taxes (the ones Pelosillynni calls VAT which is already embedded. All income tax is a control tool or weapon.
End User Consumption tax is the other way around.
However returning to your question I planned ahead, bought a boat and moved across the borders as part of my formula.
There is no magic number except not voting for the Government Party. Live in the USSA you are doomed to frustration so treat it like the game it is and cure frustration by doing it in Roman Numerals, sending the return and the check in two envelopes, or stuffing those teeny marshmellows up your nose and seeing how far they will go when you sneeze.
I'll put it another way. If they were interested in efficiency and raising money WHY do they pay me their money and have me give it back some months later? Why? Cause they like to harass citizens.
Practically speaking move out of California or Michigan or Massachusetts to a non income tax state except Washington. That cuts out the State part of the problem. Moving to those states which also lowered my true cost of living was like a big aspirin. Then move on a boat and out of a house. Big deduction in living expenses.
Worked for me as I was not chained to a location in my employment.
Works Great for retirement too!
Sorry too long and wordy but it's a matter of choosing options and being willing to give up a lot of things that for me I find I didn't need anyway.
As regards the taxes, depending on your income, you will be paying at least 50% of your wages to state and federal agencies. There has to be something really wonderful about California to pay that much to just live there, That number doesn't consider sales and use taxes which I'm sure adds another 10% or so.
Haven't done my taxes yet.
I fully expect to get my clock cleaned.
I don't wanna do the math! I don't wanna do the math!
Spreading the wealth around! Wheee!
and work hard to stop 'em in your spare time (how,
as a retiree I think, did I ever find time to go to work?)....... -- j
My disclaimer: Mark is my tax attorney, I am not an attorney or CPA. I do not get anything for referring this to you other than that I will be happy if it helps you. Good Luck
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