How The Little Things Can Add Up To Big Tax Savings
The last few weeks I've been sharing how to create habits that enable you to use your taxes to build your wealth
.
Here are the habits I have shared so far:
Habit #1: Avoiding tax advice that is for the general population
Habit #2: View every day as an opportunity to reduce your taxes
Habit #3: Don't put off until tomorrow what you can do today
Last week I shared that those who stay organized throughout the year are more successful at reducing their taxes than those who don't.
This goes right into the next habit:
Habit #4: Use your bookkeeping as an every day tool to reduce your taxes
Most people dread the thought of bookkeeping and are happy to avoid it. I look at bookkeeping differently. Bookkeeping is a tool that helps me reduce my taxes.
Most people are familiar with bookkeeping when it comes to a business or real estate, but what about for your personal finances?
Bookkeeping provides a system to organize and track your personal expenses - many of which are deductible but never deducted because they are missed.
When it comes to expenses, the little things add up to big tax savings!
Have you ever gone to look for cash in your wallet and the amount there was less than you thought?
It's easy to forget where our cash goes!
It may go to coffee, breakfast, lunch, dinner, gas, postage, tips - all sorts of expenses. All of which have the potential to be deductible.
These little expenses can add up to big tax savings - and these are permanent tax savings!
Let's say a person spends $20 every day. That's over $7,000 a year in missed expenses that can result in an overpayment of taxes of over $2,500!
And since you most likely spend cash every day, your bookkeeping is a tool you can use every day.
Bookkeeping isn't just helpful for tracking your personal cash expenses.
It's also a helpful tool to track other personal expenses, including:
Home office Vehicle Travel Meals Entertainment Medical and dental Charitable contributions
All of these expenses have the potential to be deductible as well. By setting them up in your bookkeeping system and tracking them, you can capture more deductions which means bigger tax savings.
Make it a habit to use your bookkeeping as an every day tool to reduce your taxes!
Remember, the government wants you to reduce your taxes.
The tax law is a series of stimulus packages for real estate investors and business owners. Understanding how these rules apply to you will help you create the habits in your daily routine to reduce your taxes.
by: Tom Wheelwright
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