I've got six very important year-end tax saving things that I would do
between now and the end of the year. We've got about a month until
the year ends. We're in 2023 and there's these six things that I would
use if I were you. I would personally use to brainstorm different ideas,
brainstorm different things that you can do now before the end of the year.
Because if next year, like if you're in March, April,
or you're doing your tax return next year, you don't want to be looking
back and wish you would have done something.
So consider these things now and they could save you a lot in taxes.
So we'll jump into those. Number one is deductions.
Just make sure you're not missing any of your deductions.
And it's, this is going to depend on your facts and circumstances.
Like if you're self-employed, your deductions that you might be missing might be paying
your kids using your home office. You might have an Augusta rule where your
office can rent from yourself. But then there's just going to be some of
those basic deductions. Like, make sure you're not missing any of your deductions. If
you're writing off your cell phone and keeping track of the mileage for your
vehicle, just think of what your business does
on a daily basis and think of the deductions related to that. And that's
if you're a business owner. If you're not a business owner, you might have
personal deductions that you want. If you're a business owner, you might have personal
deductions that you might have personal deductions that you don't want to miss. Those
are like this mortgage interest on your house charitable donations.
Make sure you're doing those by the end of the year and then those
retirement contributions. Those are deductions can be deductions and reduce your taxable
income. Them. So it's going to depend. If you're a business owner or personal,
but remember number one was deductions. Make sure you're not missing those and number
two. This is a strategy really well widely used strategy
that I use all the time with people and it's a deferring your income.
We'll be right back. So you think of like every tax year starts
in January ends in December and whatever happens in that year,
whether you got income or you paid out of expenses,
the net, the net income of that, the net tax year.
The taxable amount of that, that's what, that's how your taxes return and that's
how your taxes are calculated. But if there's a way where you could defer
your income, like say you've got a, you're self-employed and you've got a $10,000
invoice or $10,000 of services you,
might get paid for by the end of the year, if there's a way
to defer that to the next year and this doesn't include holding on to
a check and not depositing it. But it's like, if your customers are actually
not paying you, maybe don't send them a reminder until the next year.
That would be deferring your income. Deferring actually receiving it and then accelerating your
expenses. This would be like, say you needed to pay for software next year
or insurance or some taxes or something for your business or
you're going to pay employees above. Own us in January,
maybe accelerate that into December. You could prepay some of those expenses like
in the current year instead of waiting till next year.
So if you time that right, this will,
this will bring us into that. The next one I want to talk about
and that's the tax brackets. You can use both of those things,
the deductions and, and then that second one I talked about is deferring income
and accelerating your expenses. You can use that in planning with your tax.
Tax brackets, which is number three, tax brackets.
This is, this is like, if you look at the tiered tax system that
we've got, I've talked about this in the past. Your income is not taxed.
Like your highest level of income is taxed. You're taxed at the highest tax
bracket and your lowest income is not.
And as you get deductions, you'll bring your income down into those lower tax
brackets. And so if you don't want to be taxed,
say at a 32% tax rate, you'll want to bring that down.
So I've got the, you want to go download in the wealth game basics
course. You want to go download that income tax projection worksheet that I have.
You'll see the different tax brackets and you'll see kind of how as your
income goes up. It moves through those different brackets,
but make sure and go and download that, that worksheet in the wealth game
basics course at wealthgame.io.
That's tax bracket planning. So you want to just efficiently plan for that.
So we've got number one. Deductions. Number two is deferring your income and accelerating
expenses. Number three was planning with your tax brackets.
And now number four is the tax credits.
So tax brackets and tax deductions.
Those are different. These are different things than tax credits.
Credits can actually mean money back in your pocket for that,
the dollar amount of the credit. So I'll say you have a child and
you claim them as a dependent. In 2023,
we can use $2,000 of a child tax credit for
that child at 16 and under. That's $2,000 back in your pocket.
The other credits that you have control over might be like a tuition tax
credit. If you're going to school, you want to claim the tuition tax credit.
If you're a business owner, you'll have the R&D tax credit.
That's research and development. Look into that. Make sure you qualify or not.
There's, there's credits for like energy efficient appliances,
energy efficient improvements to your home, or investment properties.
There are solar tax credits. There are electric vehicle tax credits.
So those are some of the very common ones. Consider those between now and
the end of the year because they could have a significant impact on your
taxes and I do have in that wealth game basics course in
that free worksheet I have where you're where we're having you project out your
income I have a lot of these common credits listed out so you want
to go download that look at those common credits look at the commonly missed
deductions just at the wealthgame.io and then number five were
entity structure. This one is very important for you business.
So if you are self-employed, you're a business owner whether
or not you have an LLC set up yet. You'll just want to consider,
you want to see how LLCs are taxed.
You want to go look at your options for that. So go look,
I do have an earlier podcast where I just talked specifically about how
the LLCs are taxed. There's four different ways that they're taxed,
but you might, you'll want to consider if you're going to be taxed.
It's an S corporation or a partnership or a regular corporation.
It's very important to consider that. I do have the videos in the wealth
game basics course about that as well,
breaking down some of the different entity structures and I give some examples.
I call it the ultimate structure of,
of, like an example of how all these different entities will kind of play
together and impact your personal taxes.
But, like, one example of why these entities are so important. The entity structure
matters so much. So if you're self-employed and you make $100,000 in a year,
like net taxable income, if your tax is a sole proprietorship,
like on your Schedule C, you'd have about $15,000 of an extra
tax on top of the regular tax called self-employment tax.
I call it a penalty tax. It's a penalty for not planning ahead,
a penalty for not having an entity set up,
an LLC, and an S corporation. You might overpay your,
those. Self-employment taxes by $15,000.
So just watch for that. Like, consider the S corporation for a lot of
business owners. Most business owners, it makes sense until you start bringing on other
partners and stuff. Kate,
then number six. So we've gone through five. We went,
we did deductions with number one, deferring in income and accelerating expenses was number
two. Tax brackets was number three.
Tax credits was number four. Your entity structure that we just talked about.
Like how your business is taxed is number five.
And then number six, I love to just brainstorm with people on investments that
give tax breaks. This is number six. Like if you,
if you have extra money and you would rather not give it to the
government in the form of taxes, you'd rather do something else with it.
There are a lot of options there. There's like one option.
So an example of an investment that does not give a tax break is
if you take that money and go put it in the stock market,
which may or may not be the best option for you for your investments.
But as far as the tax breaks go, you don't get any tax break
when the money goes into the stock market.
But when the money goes into, here's some examples. This is not all of
the examples, but if you're a business owner, if you go and buy equipment,
you're like, well, I've got $20,000 of extra cash.
Do I want to pay tax on that? Or do I want to go
buy some equipment? If you went and bought, say, a tractor or a vehicle,
you could reduce your tax. Or if
you went and got a loan, I actually, I like loans because of
how you can multiply your deductions. With that same $20,000,
you could say, do, You got a $5,000 down payment on four different $20,000
pieces of equipment, and now you've got $80,000 of reduction in your
taxable income, if you got a loan on all of it.
The next one is if, so if you're buying, If you're buying equipment
for your business, if you're buying assets,
and this, this is assets as a business owner or assets as an investor.
Say it's like vehicles or computers or laptops or furniture, things that you're using
in your investment. Those are going to be deductions and help reduce your taxable
income. Assets and equipment for personal purposes are not going
to be deductions. If you go buy a couch for your front room in
your house, it's not going to be deduction. But if you buy a couch
in the front room, you can buy a house. If you go to the
front room for your business or in your home office,
that could be a deduction. So just consider how the asset is used and
that'll help determine the if you get a tax break or not.
And then part of this still this number six we're talking about investments to
give tax breaks. Would be real estate.
I love real estate. That's where I'm spending most of my money and putting
most of my money. I love the accelerated depreciation. I love doing cost aggregations
on it. Whether it's commercial property or not.
It's a lot of tax breaks you can get from that.
And it can reduce your taxable income in many cases.
Sometimes it can't reduce your W two income if it's a passive investment.
I've watched some of those other videos I've got of like short term rentals
or being a real estate professional. That's those are a couple ways you can
have your real estate investments not create passive losses for you.
So we can actually use those losses to offset some of your other income.
And then this last tax break I'll talk about investment that gives the tax
break is the oil and gas investments. So if you're investing in an oil
with an oil and gas company the losses that get they give back Bye!
To you typically in the first year about 80 to 90% of the money
that you put in. So if you put in $10,000 into an oil and
gas investment you make an $8,000 or $9,000 deduction back and you get
cash flow and at the end of it. It. You can get your your
cash back your original investment back. So it's pretty amazing.
So we've talked about six things here. I would go to make sure to
go to wealthgame.io. Just go to that get that free basics course and
you'll see. The spreadsheet for tracking your income and you'll see a spreadsheet
where I've listed out a lot of these tax deductions and a lot of
the like these six steps are in the the tax strategy worksheet.
So there's a tax projection worksheet. Where you calculate your income and expenses and
then there's a tax strategy worksheet where I've got all these six things listed
with a lot of the different options and links to episode podcast episodes and
stuff there too. So the six things are. Minutes and we'll be back for
a week or two months. Number one was deductions. So things to do by
the end of the year, watch for your deductions. Make sure you're not missing
any. Number two is defer your income and accelerate expenses if possible.
Number three was your tax brackets plan for those.
Number four was tax credits. Make sure you're not missing out on any tax
credits. Number five is make sure your entity structure is set up right in
your tax efficiently. And then number six,
watch out or in plan for investments that give you tax breaks.
If you're looking for a tax break. So that's it for everything today.
Go to again, wealthgame.io, wealth game basics courses where I'm going to have
these spreadsheets. And it's just completely free.
But go in there download that. My goal is to just get you as
much information as I possibly can between now and the end of the year.
I don't want you to say like when you're getting your tax returns done
next year. I don't want you to feel like you're missing out or you
missed out or you should have done something. I want to make sure you've
got that opportunity now. Have a good rest of the day.
See ya. Thanks for watching.