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How to Slash Your Property Taxes

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.

How to Slash Your Property Taxes Read More »

Tax Planning Software – Artificial Intelligence or Skill Saw?

Question: How much time should be devoted to studying tax planning? Can’t I just select a software providing Artificial Intelligence to Inform Me What to Do?

Answer: To answer this question Dear Reader, I’ll ask a question in response. Are you a user of TurboTax or a similar software tool?

Chances are as a reader of Think Outside the Tax Box, you use something (or someone) different than software purchased at a big box store. The answer to this question may be a similar situation to a semi-regular TikTok viewer of DIY household construction projects. Does the job require a router or a Dremel tool?

If you’ve heard me talk about tax planning before, no doubt you’ve heard me describe tax planning software as an instrumental tool. It can provide valuable insights such as data extracted from your tax returns, calculation of minimum required estimated tax payments, and even a few tips to save annual tax.

Whether you are a do-it-yourselfer braving a construction project in your home or a new business owner or novice tax planner, the answer depends on the nature of the job you are doing.

Is it possible for this experienced Tax Planner of more than 20 years with an advanced degree and thousands of tax plans to complete a bathroom remodel in just a weekend with a Dremel tool? Certainly. I’ve even got the pictures to prove it.

Just like the bathroom-in-a-weekend, it is possible with an off-the-internet-software to develop a few ideas to save some tax dollars. But if you look closely at my personal photos – you’ll notice the glue expired on my “driftwood” mirror frame. The recycled wood tiles failed to stay up with the shower moisture in the air, and while the dimensions of my replacement countertop – the walls were just a hair too uneven in my old house.

In the end, my weekend project took more than 4 weekends of my precious free time, more than $1,200 in the after-the-fact hired help to fix my handywork, and a little of my pride revealing this online to a public audience.
To read about when it is a DEAL BREAKER to rely on AI tax planning software, click here to continue reading.

Tax Planning Software – Artificial Intelligence or Skill Saw? Read More »

Just Good Business – Curate Your Subscriptions

Do you ever feel like your inbox is out of control? Perhaps you even have more than one out of control inbox. Do you find yourself getting vapor-locked from information overload? Do you consider the phrase “inbox zero” and feel like it’s as achievable as driving to the moon?

It’s time to work on that. An uncurated collection isn’t a collection it’s a hoard, and an uncurated information library isn’t a library it’s a digital fire hazard. Digital clutter can be as detrimental to your professional life as physical clutter is to your personal life.

Before you start curating, however, I recommend giving some thought to how you want to go about it. For example, I have a work e-mail that is for clients to reach me that I only access when I am at my desk working.

In general, my work e-mail is not the e-mail to which my subscriptions are sent—not even the tax-related subscriptions. My work e-mail is for clients only (and a few colleagues). That way, if I want to read tax news when I’m not working, I’m not distracted by e-mails from clients.

At the same time, my tax news goes to a different inbox. My shopping ads go somewhere else as well. While I don’t recommend having one e-mail address for each type of communications, having a few different e-mail addresses (one for “work work”, one for work reading and networking, one for personal use and shopping) can help to create boundaries that will keep you from being distracted by work when you are trying to shop and vice versa.

Once you have your various inboxes set up (or not), it’s time to take a cold hard look at all of that digital clutter. Let’s face it, most of us don’t read the consumer disclosures when we sign up for something or use a business’ website.

Whenever you provide your e-mail address to a business or use their website your e-mail address is captured. Unfortunately, not only does the business with which you are transacting use that as consent to e-mail you, often the use disclosure includes authorization for the business to sell your data (either anonomized or not) to other businesses. That’s why when you order custom business swag from one company you are not only inundated with additional e-mail from that company but you start getting e-mail solicitations from businesses selling similar or complementary products and/or services.

The same thing happens when you register for continuing education classes, enter a drawing at an expo using your business card, or join a professional organization. You start getting e-mail solicitations from that company, but if, or when, that company monetizes their e-mail list, your e-mail address is included. Yay! (Can you sense my sarcasm?)

I read once that it takes an average of nine “touches” to convince a consumer to make a purchase. Unfortunately because e-mail is relatively inexpensive and easily automated, many retail businesses use it to make all of those touches. Between regular shopping, gift shopping, professional organizations, professional news, regular news, it’s really easy for the amount of e-mail into your various inboxes to get completely overwhelming in a short period of time. That’s why it’s just good business to spend some time once or twice a year curating your subscriptions!

If the thought of trimming down your subscriptions gives you FOMO, keep reading for some tips and tactics to make sure you still get important notifications while eliminating the excess.

Just Good Business – Curate Your Subscriptions Read More »

DeFi Games as a § 162 Activity

In our recent issue, we discussed the exponentially growing universe (or metaverse if you will) of DeFi or blockchain based gaming. In that article, I shared how dedicated players support their livelihood, especially in places with a low cost of living, by playing the games.

In this issue we will explore the concept of a “Trade or Business” as defined by § 162, and how specifically how blockchain gaming meet this threshold. For a quick refresher of what constitutes a § 162 activity, see our article “Pros and Cons of Cryptocurrency Mining as a Trade or Business.

Why become a trade or business? Meeting these requirements can make a difference between video games being treated as a hobby and becoming a tax benefit.

Click here to keep reading.

DeFi Games as a § 162 Activity Read More »

US V Harry Stonehill – America’s Jarndyce v Jarndyce

1962. It was the only year in which JFK was president for the whole entire year. World events impinged on my family. My older brother served onboard an aircraft carrier chasing Soviet submarines and when not recovering Mercury astronauts, had his four-year enlistment extended to five. Somehow the bright fourth grader that I was, I missed the story of the dramatic raid by the Philippines National Bureau of Investigation on March 3, 1962. According to reporter, Amando Doronila, who covered the raid, 200 agents seized 35 truckloads of documents from 27 offices and corporations controlled by American expatriate Harry Stonehill.

Why should we care? Believe it or not, the implications of that March 3, 1962, raid are still being litigated in the United States. Read on to learn more!

US V Harry Stonehill – America’s Jarndyce v Jarndyce Read More »

Retirement Tax Planning – Work for All Seasons of Life

The single best skincare tip for avoiding wrinkles is to stay out of the sun. What does this have to do with retirement tax planning? Well, much as skincare shouldn’t stop when the first wrinkle appears, tax planning for retirement shouldn’t stop at retirement. Tax planning for retirement is an ongoing balancing act that, in a perfect world, begins with the first earned income and continues for the remainder of the taxpayer’s life. The trick is to balance tax strategies that help while a client is working with tax strategies that are going to benefit the client once they retire all without having a crystal ball as to how tax laws may change in the short- or long-term future. This article is the first in a four-part series that explores tax planning strategies both before and during retirement and discusses the importance of pro-active planning before and during retirement.

Keep reading to learn more…

Retirement Tax Planning – Work for All Seasons of Life Read More »

TAX PLANNING FOR CLERGY

“The hardest thing to understand in the world is the income tax” – Albert Einstein

You may have spoken to clergy members about many things, but I’ll bet you never spoke with them about their tax issues. Did you ever wonder whether and how clergy are taxed and how they pay taxes? Clergy taxation has some surprising twists and turns. Are they employees or self-employed? Is their income taxable or exempt from income tax? Can they deduct their business expenses? If these were multiple-choice questions, you might need an “all of the above” option. Or, as is often the case with tax-related questions, an “it depends” option. Tax compliance pitfalls and tax planning opportunities abound. Read on for more.

TAX PLANNING FOR CLERGY Read More »

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