Tax Season Everyone!

 

Hello everyone,

The weather grew warmer, lifting our mood from seasonal depression. However, your mood is not completely lifted, not until you get through your taxes. Welcome to the tax season where you are forced to reckon with the bane of your existence: the annual tax report. This is where you give the government a portion of your income, and who knows what they will actually do with it. Maybe they can waste it, but you never know. 

Many people hire accountants to do their taxes because a good accountant who provides you with access to all the tax loopholes in America could help you save thousands. As a future economist, this is a rare time I respect the accountants, despite the ongoing beef between economists and accountants. However, accountants mostly have lots of clients to take care of at the same time during the tax season, reducing the potential quality of the customer service experience for each client. Moreover, a good accountant costs a lot to afford, especially for my young readers. 

Anyway, today, I will tell you what I know, and feel free to expand on my words. Maybe you will learn to save some money from flowing to the government. Of course, I will try not to make this too dull.

As annoying as tax is, the government has to collect tax money to fund our activities such as strengthening our systems (ex: healthcare, education, or defense). Anyone with employment or income has to pay taxes. On our end as taxpayers, we have to pay local, state, and federal taxes. The amount of tax we pay mainly depends on where we live. For instance, New Yorkers pay a hefty amount of tax due to New York being a prosperous city that contains plenty of public utilities to maintain with taxes. On the other hand, Florida and five other states in America don't even have state taxes. 

So what did we learn? Pick a tax-advantaged location to reduce tax. Additionally, taxes also depend a lot on our income. If your income falls below the income threshold, then you qualify to file the IRS free file.

Let's continue with the more exciting information that you actually want to know: ways to save money on taxes. Your parents probably noticed that the Annual Tax Report system encourages spending in the form of loans, donations, and business expenses. One way many people reduce taxes is to start a business. Every expense on business operations such as buying business supplies, business travels, or business meals could create a tax deduction. 

Blend your business with your life, many things in your life could receive tax deductions.

By any chance you qualify for any tax credits such as the Earned Income Tax Credit, Child Tax Credit, and American Opportunity Tax Credit, use them. Overall, you want to reduce as much tax money as possible.

Now it's about time we bring out our tax refund maximizing machine: retirement accounts. Retirement accounts such as 401k and traditional IRA do not require any taxes from you when you start the account and continue to keep the account going for forty to fifty years, but you will have to pay taxes once you draw them out for retirement. As for a Roth IRA, you pay the tax when you start the account, so you won't have to worry about tax ever again. All those retirement accounts will benefit you greatly in terms of taxes. Guess what? You can start a retirement account at 18! Hope that helps.

Okay, that's about it for taxes. File them early so we won't have anxiety over any of this before the deadline. You can do it!