Tax saving question - newbie

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sanfax
Posts: 1
Joined: Sat Mar 11, 2017 6:19 am

Tax saving question - newbie

Post by sanfax » Mon Mar 13, 2017 4:34 pm

Hello fellow bogleheads,
Trying to explore ways to minimize income tax or fall into lower bracket. Appreciate any help in this regard.
Based out of CA, husband and wife together making approx $300k. No kid yet.
401k maxed at 18k each, which is 36k per year for both
mortgage interest 24k per year
property taxes 13k

Can you please list out other avenues to reduce income taxes?

ralph124cf
Posts: 1832
Joined: Tue Apr 01, 2014 11:41 am

Re: Tax saving question - newbie

Post by ralph124cf » Mon Mar 13, 2017 7:00 pm

If all income is W-2, there is not that much you can do.

I will note that CA income tax is deductible, is a large part of your annual car tax, and charitable contributions.

Necessary work expenses such as small tools and unreimbursed travel expenses and union dues are deductible, as are professional societies such as the AMA or ABA and publications, subject to certain limitations.

Ralph

livesoft
Posts: 59291
Joined: Thu Mar 01, 2007 8:00 pm

Re: Tax saving question - newbie

Post by livesoft » Mon Mar 13, 2017 7:05 pm

livesoft wrote:From an old locked thread:
livesoft wrote:Y'all aren't trying hard to reduce your taxes. I"ve posted this list of things you can do to reduce your taxes several times before:

1. Earn less money or quit your job. Lower income means lower taxes.
2. Lose big time in the stock market. We all now know that we can deduct some losses against ordinary income.
3. Get married and have lots of kids. You get more exemptions and maybe even the child tax credit.
4. Get the biggest house and biggest mortgage you possibly can. You can deduct the interest payments on Schedule A.
5. That big house should come with huge property taxes which can be deducted on Schedule A.
6. Give away your money to charity (you got this one right).
7. Pay an accountant to do your tax return for you, but you have to pay them alot because only the amount above 2% of AGI is deductible. Same goes for an investment advisor.
8. Don't have any interest-bearing accounts in your taxable side of things. You don't want to get any taxable interest that would drive your taxes up!
9. Get really sick and pay for your treatment yourself. You can deduct any medical expenses above 7.5% of your AGI.
10. Poke your eyes out. If you are blind, you get an extra exemption. You will probably need medical attention (see #9).
11. Grow old. If you are over 65, you get an extra exemption.
12. Move to a high tax state like NY or CA. You can deduct state income taxes (I'm not sure about sales taxes in 2008 anymore).
13. Contribute pre-tax the max allowed to your retirement plans. You can't even hold some money back for expenses if you really want to reduce your taxes.
A couple more:

14. Rental real estate that loses lots of money.
15. Participate in a Deferred compensation plan.

#8 above is another way of saying don't have any income on the top half of Schedule B. If you look at your tax return, get rid of accounts that give you income on the top half of Schedule B and try to have only qualified dividends which go on the bottom half of Schedule B or no dividends and no interest at all.

My bottom line is that most tax-saving schemes cost you more money than the taxes that you would save.
This signature message sponsored by sscritic: Learn to fish.

2pedals
Posts: 330
Joined: Wed Dec 31, 2014 12:31 pm

Re: Tax saving question - newbie

Post by 2pedals » Mon Mar 13, 2017 9:01 pm

After you have significant savings retire early and convert 401K and TIRA to Roth.

sksbog
Posts: 154
Joined: Wed Jun 20, 2012 9:14 pm

Re: Tax saving question - newbie

Post by sksbog » Mon Mar 13, 2017 9:05 pm

sign up for HSA and max it out.
have 529 plan and take classes, go back to school.
produce / adopt kids :) [ btw, I am up for adoption ;)]

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