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5 Infallible Ways to Lower Your Income Taxes

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Internal Revenue Service Is Choking MeTaxes suck. We all understand why we need taxes, but they still suck. Everyone hates them. We hate them every time we go to the store (unless you’re in Alaska, Oregon, Montana, Delaware, or New Hampshire – states with no states sales tax), we hate them every time April 15th rolls around, and homeowners hate them when that real estate assessment or property tax bill shows up in our mailbox.

So, here are five infallible ways to lower your income taxes (you’re on your own for anything else), you’ll thank me later. :)

Don’t save. One of the down sides of saving money is that you can earn interest on your money. If you happen to get tricked into opening a high yield savings account, you could be earning far more than at a regular checking account. While at first it sounds good, you have to realize that interest is taxed and all you’re doing is giving the government more of your money! Stay with 0% APY checking accounts, that will guarantee your tax bill won’t go up because of pesky interest.

Earn less. The beauty about taxes is that it’s a percentage of how much you earn, so if you earn less, you are taxed less! Take this example of someone who is in the 25% tax bracket. If he earns an additional $100, then he has to pay an extra $25 in taxes. That’s unconscionable! If he were to instead earn $100 less, then he would pay $25 less in taxes. Heck, quit.

Lose money in the stock market. There are plenty of penny stocks you can roll the dice with and the IRS lets you deduct up to $3,000 of losses against other income. If you were to go to Vegas and lose it on the craps table, the IRS would let you deduct $0! Take advantage by picking some no-name stocks and hoping they do poorly! If you’re in the 25% tax bracket, losing $3000 in the stock market means you will not have to pay $750 to the IRS.

Start cranking out kids. Lots of them. Kids are great tax deductions, just start popping them out and you get to claim them as dependents (deduction!) and you might even the child tax credit (cha-ching!). That child tax credit is worth up to a thousand bucks a child! That’s right, Jon and Kate Plus 8 get $8,000 in child tax credits each year! Sometimes when I see that show on TV, the kids look like little bundles of hundred dollar bills.

Buy too much house. The most important thing about a house is the size of the mortgage interest deduction. Well, that’s the second most important thing, the first most important thing is to get the biggest house out of anyone you know. But, that mortgage interest deduction is going to take serious money off your tax bill and the more you pay in interest, the better (plus, it means property taxes will be higher too!). While you’re at it, remember to get a home equity loan on the equity you have built up so you can get a deduction on that interest as well. Leaving equity in your home is like leaving money in the banana stand, you’re just asking for trouble.

:)

(Photo: mlee)

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13 Responses to “5 Infallible Ways to Lower Your Income Taxes”

  1. Frugal Dad says:

    I missed the call to place tongue-in-cheek when reading this (it’s still early), so my initial comment was going to question your advice to earn less money and buy more house (which I thought was a recipe for financial disaster). Ha!

    You do make a good point about losing money in the stock market. With the year we’ve had, it might make sense to pull some losses off the table in stocks to reduce taxable income. Especially true of stocks you don’t have much faith in bouncing back any time soon.

  2. That One Caveman says:

    Popping out kids is fun, especially if you can time them to come just before the new year. That way you get to claim them for the whole tax year, but they only cost you for a few days! :D Just kidding, really. While both of my children have/will have December birthdays, that’s far from the reason. (Think March birthday…)

    As Bender found out in a classic episode of Futurama, those little rugrats cost you far more than the government pays you to produce/procure them.

  3. Jeremy says:

    An even better idea is to actually get paid by the government. Just quit working and live off of the various social programs. If you’re lucky, you live near a good soup kitchen and can score some free food as well. Let all of those suckers that work and pay taxes pay you! ;)

  4. Patrick says:

    HAHA. Great article Jim. My fiancee and I watch John and Kate plus 8 all the time. That show is great as they really raise their kids right. I wish I would have bought a house I couldn’t afford now so I could be bailed out by the government.

  5. George says:

    Love the article, this smells of Devil’s Advocate…

  6. NickFro says:

    Jim, you’re not supposed to drink *before* writing your posts… also, I almost spit out my coffee when I read the “kids look like little bundles of hundred dollar bills” bit. Thanks for almost destroying my keyboard.

  7. Nick says:

    There’s always money in the banana stand!

  8. Shadox says:

    Awesome advice! I’ll get started immediately. In fact, I have been doing quite an excellent job at losing money in the stock market and if the economy continues to deteriorate, there is a fair chance that I will be making less too. Looks like I’m pretty much set!

  9. I’m with Shadox. You don’t need to find no-name penny stocks. Heck, the blue chips are losing more than enough t be able to take the capital loss against your taxes.

  10. Don’t forget if you’re a free-lancer, go back to work for someone else, which will do away with that pesky self-employment tax!

  11. tim says:

    Jeremy already mentioned this, but it bears repeating:

    THE DIRTY LITTLE SECRET THE IRS DOESN’T WANT YOU TO KNOW!
    Did you know that if you don’t work, you don’t don’t have to pay any taxes? Seriously! Just don’t make any money, and the IRS will be powerless!

  12. foxroswell says:

    I guess OctoMom will be collecting a cool $14000 for her brood of sperm donor babies.

  13. ar_ref says:

    @Nick

    You, sir are a mouthful.


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