Take
control of your taxes. Know enough about the tax
laws so that you can prepare your own return or
intelligently review your return prepared by someone
else. You are the person best qualified to look after
your financial interests.
Use tax preparers only when you need them. If
your situation hasn't changed since last year, you're
probably wasting your hard-earned dollars paying a tax
preparer to plug your new numbers into this year's
return. Unless your finances are complicated or the tax
laws have dramatically changed in an area that affects
you, try preparing your own return. If you get stuck or
want another opinion, you can always take it to a
preparer at that point.
Get and stay organized. Try to keep your tax
and financial documents organized year-round. This
practice saves many hours when preparing your tax return
and making important financial decisions.
Use tax laws to reduce your taxes. If you
educate yourself about the tax laws and incentives, you
can dramatically and permanently reduce the taxes you'll
pay over the course of your lifetime.
Remember that the IRS is not always right.
Whether providing advice over the phone or challenging
taxpayers' returns, the IRS has made more than its fair
share of mistakes, so don't panic if you get a call from
Uncle Sam. If you haven't knowingly cheated and
defrauded the IRS, you have little to fear from audit
notices or other IRS letters. Calmly organize your
supporting documents to prove your case.
Learn from your return. After you've gone to
all the time and trouble of preparing your tax return,
don't let that effort go to waste. Use the information
to identify areas for better financial management for
the coming year.
Spend less! Save more! Remember: The more you
consume, the more you'll pay in taxes. As you earn
income and spend it, you not only must pay income tax on
your earnings, but you also incur sales tax and other
taxes on your purchases. Moreover, many of the best tax
breaks available for people at all income levels are
accessible only if you are able to save money to invest.
Invest tax-wisely. Don't overlook tax
implications when investing your money. Remember, it's
not what you make but what you get to keep that matters.
The best way for people at all income levels to reduce
their income taxes is to use retirement accounts. You
reduce your taxes by contributing to these accounts now,
and after the money is inside the account, it compounds
without taxation.
Don't buy real estate only for tax purposes.
Owning your own home and other real estate can be an
investment that helps to reduce your taxes. But don't
purchase real estate just because of the tax benefits --
these benefits are already reflected in the price you
pay for a property.
Know when estate planning matters. Read up on
this issue so that you know when and what you should do
to arrange your financial affairs.
Be happy with success. Taxes are the
inevitable result of making money. The more you make,
the more you'll pay. If you pay a lot, be happy that
you're earning a lot in the first place. Although it's
tempting and easy to be cynical about the government and
taxes, remember that without taxes, we wouldn't have
public libraries, roads, bridges, national parks,
museums, defense, and a whole lot of other things that
make our lives better.
Keep taxes in perspective. There's more to
life than working and making money. If you do such a
good job reducing your taxes that you gain great wealth,
don't forget to enjoy and share it with others.
