Blog | Personal Finance

The Fastest Way To Put Money In Your Pocket In Now

How reducing your taxes can immediately reduce how much money comes out of your paycheck

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Today, people come to me professionally all the time asking how they can make money. Many of them need cash right away. I’m not a believer in get-rich-quick schemes. My clients are hardworking people who are looking for a better way to increase their cash flow and their wealth. I’m sure you’re looking to do the same thing. And there’s good news. There’s one way to put cash in your pocket almost immediately: reducing your taxes.

By reducing your taxes, you can immediately reduce how much money comes out of your paycheck. Or, if you’re an entrepreneur or investor, you can reduce your quarterly tax payments.

And you don’t have to wait until tax time to enjoy the benefit of lower taxes. In many countries, including the United States, you can file amended returns anytime, which correct errors on returns for up to the previous three years if you learn that you paid too much in a prior year. Or you can even carry back a loss from the current year to a prior year, use the loss to offset the prior year’s income, and get a refund now.

Don’t rely on your advisor

Notice what I said: you can put money in your pocket by reducing your taxes. The operative word is “you.” You, and only you, have the power and control over your money and your taxes. Nobody else. This includes your tax preparer and your tax advisor. They cannot reduce your taxes. They can only help equip you to do so.

You may say, “My tax advisor handles my taxes,” but that is a myth about income taxes. Your tax advisor cannot handle your taxes. They can prepare your tax returns. They can give you advice about what to do in a particular situation. Quite possibly they can even tell you some rules that will help you reduce your taxes. But they cannot take the actual steps to reduce your taxes. Only you can do that.

Change the way you look at expenses

Let’s face it, the best part of having money is spending it. But when you can not only spend your money but also decrease your taxes while doing so—well, then you’re really cooking.

I know a lot of people who love to shop for bargains and constantly look for sales and specials. It’s like a professional sport to them. You wouldn’t believe the amount of time, energy, and effort that they put into finding deals and saving money. They’re thrilled with a 20 to 30 percent discount on their purchases. But when it comes to doing their taxes, they don’t want to take the time. I don’t get it—well, actually, I do. Tax returns can be a royal pain. And most people just want to get them done and over with as quickly as possible. But what if you could get a 20 to 30 percent discount on all of your purchases any time of the year? That’s exactly what happens when you change your expenses from a personal expense to a business deduction. The government essentially pays for 20 to 30 percent of your purchase in the form of a tax deduction.

I like to shop at Costco, a discount store that sells groceries and other everyday items. Costco also sells gasoline. People line up, sometimes waiting for long periods of time, in order to buy their gas at Costco because it’s routinely 10 percent less than other gas stations.

I never buy my gas at Costco.

Why? Costco doesn’t allow me to use my business credit card. And since most of my car use is for business, I get a deduction for the gas if I use my business credit card (plus I get frequent flyer miles). That deduction is worth 20 to 30 percent to me in lower taxes. So it’s worth paying a little more at the gas station down the street in order to get the tax deduction.

It’s the little decisions like these, made every day, that adds up to big savings in your taxes.

To learn more about growing your wealth through legal tax strategies get my book, Tax Free Wealth.

Original publish date: September 16, 2019

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