When it comes to taxes, pretty much all of us are interested in one thing: How do I pay as little as possible? This is a great question, and it’s really what this Understanding the Tax Game series is all about. It’s helpful to look at taxes as a game with rules. If you understand the game well enough and play by the rules, you have a better chance of “winning” the game.
I love the film Hoosiers. Not just because it’s a great Cinderella story, but because it has so many great lessons to be learned. Lessons about the values of fundamentals.
The basketball coach in the film is a relentless fundamentalist of the game. For example, he obsesses over his players making “three passes!” before anyone takes a shot. This is initially met with outcry from the fans and rebellion from the team, but as the film progresses the coaches commitment to the fundamentals wins his team over…all the way to the championship.
I’ve been thinking recently about some of the fundamentals of another game—the tax game. Few of us actually look at taxes as a game (rather, a complete headache), but the game becomes much easier—perhaps even fun—when the principal rules are understood.
It doesn’t take a genius to know that the IRS has stacked the tax code with incentives for savers. Perhaps the biggest saver benefit being the tax-deductibility of retirement plan contributions, and allowing your retirement gains to be tax-deferred.
But there’s another little-known way the IRS is willing to pitch in. It’s called the Saver’s Credit. For those who qualify, this credit can result in a 10%, 20%, or even a 50% tax credit for your retirement plan contribution in 2018!
It’s been almost two years since I started Hale Financial Solutions. What an incredible journey I’ve had as a business owner! Owning a business certainly comes with its challenges, but there are some incredible benefits as well. You might liken it to Charles Dickens’ token phrase from A Tale of Two Cities: “It was the best of times, it was the worst of times.”
But I must admit, the good times feel really good when running your own company.
No one likes paying more than their share of taxes. As a result, we’d all be wise to do a little family tax planning as the year goes along, but as the saying goes “time waits for no man.” Heck, can you believe it’s already November?!
For the wannabe tax-saver in you, here are 5 steps you can take today to potentially lower your taxes. There are many types of deductions available, but the one’s I’ll mention here are, I believe, some of the most “actionable.”