Voter registration, a drivers license, and day counting are what come to mind when people think about residence for state income tax purposes. There is no question that those basics are very important and ignoring them can kill your cause. Nonetheless, many other factors can enter into a determination, including church attendance and pets. That’s because you will generally be a resident of the state in which you have your “domicile.” And domicile as a concept borders on the mystical. It is your true home, it remains your domicile until you abandon it and establish a new one. Yet, establishing your domicile in a state with no (or low) income taxes can be lucrative. In some cases, this can represent millions of dollars all by avoiding state income tax. The natural progression of a business owner’s life can also include exiting said business at substantial profit. Your domicile at the time of the transaction can be pivotal in determining how much of that profit you’ll be left with in retirement. To learn more about how to do this, keep reading.

It's hard to escape the news covering numerous methods high net-worth clients use to minimize their taxes. A ProPublica (June 8, 2021) headline trumpets, “The Secret IRS Files: Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax.” CNBC (September 20, 2021) highlights, “The wealthy may avoid $163 billion in taxes every year. Here’s how they do it.” Even Teen Vogue dives into the topic. If you're a taxpayer of more modest means, you may think, Hey, what about me? I can’t afford the team of high-priced tax advisers or consider many of these tax reduction techniques. Are there ways I can minimize my taxes that are legal, easy to implement, and affordable? The answer is a resounding YES. And how do I qualify? Read on for some tax planning tips that will work for you. Part One (of this two-part series) covers strategies to reduce your adjusted gross income.

Far too many of these Employee Retention Credit (ERC) claims are nonsense. Now don’t get me wrong. I enjoy helping businesses claim the ERC. I have written in these pages about the unique ways a business may qualify and how to use startup eligibility even for existing employers. But let’s be honest: People are manipulating this program beyond belief. The refund dollars are too attractive and have created far too large an incentive for shops charging high commission fees (I have seen fees charged between 10 to 35 percent of the refund). In the coming years, numerous aggressive ERC shops may contact you if they haven’t already. How do you know whether a claim is legitimate or nonsense? Here, we will review the most prevalent bad arguments to help you avoid trouble.

Question: You talk a lot about reducing federal taxes, but what about other taxes? It seems like we get taxed on everything multiple times! Is this even legal? Answer: Isn’t it the truth! You may feel that your income, purchases, and belongings get taxed double, triple, and even more times. The saying goes, “nothing is certain except death and taxes.” And even when you die the same property and earnings may be taxed again. The Supreme Court even answered the question in 2015 about whether taxing the same income more than once is constitutional. In the case of Maryland v. Wynne, the 5-4 decision indicates that two states do not have the right to tax the same income. While many of the strategies discussed in Think Outside the Tax Box reduce federal taxes, most of them will reduce your state income taxes as well, depending on whether or not the state in which you pay taxes conforms to federal tax law. In addition, there are many state tax reduction strategies worth learning and implementing. However, did you know there are also tax reduction strategies for other types of taxes like property taxes? One of the oldest taxes and primary sources of revenue for states, counties, cities, schools, and fire departments comes from taxing the value of property owned within a jurisdiction. In some locations, this can include personal property as well as real estate. Like most good tax laws, property tax laws include loopholes you can use to pay less. To learn more, continue reading here.