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Mike
Carruthers:
This
time of year we all feel the tax bite, so perhaps you'd be motivated
to reduce your taxes next year with a little planning.
Sandy Botkin, CPA, Esq.:
There is nothing more lucrative than tax planning. It's
better than a raise because it's after-tax money.
CPA Sandy Botkin,
author of the book Lower
Your Taxes Big Time, is a former attorney for the IRS.
Do you know that
if you save four thousand dollars in taxes (four thousand -
we're not talking about a lot of money) and put it away in an
average performing mutual fund for thirty years, you know it's
worth an extra 1.3 million in retirement.
But if you're
a salaried employee, how do you save that kind of money on your
taxes?
Start up a legitimate
side business. It does not have to be full-time, work it like
a business not like a hobby, and have the right documentation
and they will generate tens of thousands of dollars for money
they're already spending but will now be deductible.
When you have
a side business, says Sandy…
You can write
off part of your house, your spouse, the equivalent of your
kids' education and weddings. Let me give you a quick example
- people ask me, "Can I deduct my kids' education, wedding,
and room and board and video games?" And the answer to
that is, "No." But then there are five ways to do
the equivalent of that. One of the ways that we mention is to
hire your kids in your business or on your rental property.
If you pay them a reasonable wage and they use that money to
pay down the road their own tuition, or for their own wedding,
or for their own video game - aren't you in essence getting
a deduction for those things?
Tomorrow, some
interesting advice about audits from this former IRS attorney
- I'm Mike Carruthers and that's Something You Should Know.
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