How Can I Save

[gman]

What are some suggestions you give clients when they ask"What can I do to save
on taxes?"
IRA'S??
Payments to children(under 18)

etc...

[Jiggers]

How can I save?

What are some suggestions you give clients when they ask"What can I do to save
on taxes?"
IRA'S??
Payments to children(under 18)

etc...

Write me a bigger check and we can deduct it!

[erchess]

The most important tax savings available to

most taxpayers is their tax advantaged savings account. Everyone has at least one option and I won't presume to lecture present company on the subject. Any client of mine who does not have one or who has one but does not max out his or her contribution hears forcefully from me about this failure.

The next place I look for savings is in the area of record keeping. Most of my clients appear to me to have more expenses involved in making their money than they they bother to keep enough information to tell me about. This can take the form of Schedule C or F expenses, employee expenses, or the expenses associated with investments or gambling.

Anyone who has average income and reasonable control of their debts should own a home, and have as their only long term debt a mortgage or home equity loan. When I suggest this to clients I always point out the downside, which is that mortgage or home equity debt is the only kind which can cost you your home. I don't even suggest this savings to clients who do not appear to be financially in reasonable shape.

The next place I look for my clients is tax advantaged investments. I am not an investment counselor but I know several good ones in my community. I know that they are good because each shares at least one successful client with me and each has provided good service relative to the tax information I need for mutual clients. (I would not have the nerve to call an investment adviser unless either I or the client with whom I need help am a paying customer of the adviser.) I once had an elderly couple that got about half of their income from a pension and the other half from rental of houses. Since the rent kept decreasing and the expenses kept increasing, I steered the couple to a Realtor who confirmed my suspicion that the houses were in a depreciating neighborhood. The couple elected to sell the houses and with the help of an investment adviser put the money into highly rated municipal bonds and a few carefully chosen stocks. Income remained adequate, the long term safety of their money increased, and taxes went down.

When I get a client with income over 150K per year I suggest that they work with "my" tax lawyer. I call him "my" tax lawyer because he does not do tax returns for people with whom I set him up but he does provide other services as needed including advice while I am working on a return. Anyway, people with incomes at this level need extensive tax sheltering. We're not talking about anything offshore or otherwise illegal. Their corporations and trusts file the required annual paperwork with the IRS and I know this because with the tax lawyer guiding me I prepare the forms the way his paralegal might otherwise do.

[GIMoe]

Bigger Check...

Write me a bigger check and we can deduct it!

Just make sure it is big enough to cover the 2% minimum for miscellaneous deductions.

[jainen]

Don't work

>>What are some suggestions you give clients when they ask"What can I do to save
on taxes?"<<

Don't work so hard! If you are lazy and don't make as much money, you are taxed at a lower rate. In fact, if you cut back far enough you can get to the point where they pay YOU!

[jainen]

maximum tax credits

>>"What can I do to save on taxes?"<<

Don't forget the old-fashioned but still useful tax-avoidance strategy of having more children. Nothing could be simpler or more natural!

Theoretically it's good through college, but you lose the CTC before they're out of high school so at that point I always recommend you send them to live with their uncle who never had any kids of his own 'cause he's gay, and you start over again with two or three new babies--buy them down at the county building for maximum tax credits.

[dyne]

I suggest that employees contribute MORE to their 401(k) plan or IRA's if deductible or
ROTH IRA if their IRA contribution is NOT deductible. ANY pre-tax items provided by the
employer should be taken advantage of if possible. Just increasing the 401(k) plan
contribution can often make an amazing differance in tax saved or actually deferred.
Increasing the 401(k) contribution or IRA contribution can reduce the portion of social
security benefits which are taxable, increase the medical net deduction and generate
a Savers Credit on form 8880 possibly.

[BP.]

ANY pre-tax items provided by the
employer should be taken advantage of if possible.

Agree. Have had a lot of conversations with clients this year about utilizing flexible spending accounts offered through employer for medical expenses. Lots of people have out of pocket medical, not everybody qualifies to deduct, but a lot aren't doing the FSA at work either.