Oct
15
Income taxes are the biggest expense you’ll encounter in life, bigger than the mortgage on your home or the cost of getting your kids through college. You can never build any real wealth without first getting your tax life under control.
One-third of all the wealth you will or won’t accumulate is dependent on whether you have a good tax plan. My experience in working with over 350,000 families during the past 15 years indicates most families are paying twice as much in income taxes as necessary. Why? Lack of a good tax-reducing plan. Your objective is to pay no more than 5% of your income in taxes.
The biggest taxpayer in American history was Elvis Presley. I remember from my days in the Nashville music business how Elvis prided himself on the massive amount of taxes he paid. He had no tax plan, no tax shelters, and got little or no tax advice. He was also in a unique position. He couldn’t outspend his income; money literally came in faster than he could get rid of it. After the excessive income and estate taxes were paid, and because of pitiful planning, Elvis’s estate was incredibly small, the government got it all.
You, on the other hand, are probably having no difficulty in outspending your income, and if so, a good tax plan will begin to plug the dike. Every dollar you save in taxes is one dollar added to your tax-free wealth. Under the new tax laws, $1,000 of additional tax deductions will save you approximately $300 in taxes.
There are two steps in reducing your taxes:
- Make money you spend tax deductible as you spend it.There are 75 strategies that will turn your personal expenses into tax deductions; you can make your vacation, education, automobile, videotape recorder, money you give to children, club memberships, interest on loans, and entertainment tax deductible. A good tax plan will make up to 60% of your income deductible as you spend it.
- Use the power of retirement plans and investment tax shelters.Tax-free compounding is one secret to financial success. Retirement plans and tax shelters give you the power of tax-free compounding.