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Tax Strategies
Started by VanBrown
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If you report earnings it's pretty much a sure thing that you're going to pay taxes. There's no way around it. So how do I minimize taxes is the question you should be asking yourself.
Take as many deductions as you can. Which probably isn't going to be much unless you have significant assests and/or your own company. But might as well take what you can.
If you are building long-term savings and eligible for an account with tax advantages (like a Roth IRA) be sure to take advantage of this.
If you're buying bonds, there are some bonds which are exempt from federal and state taxes. You'd have to compare the rates to other bonds + taxes to see if it's really worth it though.
how much can you deduct for student loans?
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Up to $2500.
Details here: http://www.irs.gov/taxtopics/tc456.html
Pub 970: http://www.irs.gov/pub/irs-pdf/p970.pdf more informative than the above link
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It's impossible to get it down to zero bc of social security and medicare taxes, plus there are state taxes. But I got the rest of it to $0 last year with a big rebate. The trick is getting credits. Definitely buy some tax software, either H&R Block or Turbotax, it will tell you every credit and deduction you qualify for, which many people miss out on. Then do an analysis of your situation and change your spending/purchases/credits/income for the next year in advance to qualify for more tax breaks.
You ask a very general question, so it's difficult to provide many details. As a medical student, your income is likely small, but in many ways, you have to spend money to save money with the IRS. Again, in general, think of the IRS as being stuck in the 50's and it rewards people who live their life according to 50's-style values:
1. The IRS rewards 50's style households (spouse of primary breadwinner earns nothing/little,) in contrast, "modern" two-near-equal income families pay more than they would if theywere both single (though this "marriage penalty" has been mitigated big time by the Bush tax cuts, I believe.)
2. Children can be a big writeoff
3. Home ownership can result in big writeoffs
4. Charitable donations can be written off
5. Small business ownership (incl. Rental Properties) can result in BIG, BIG, BIG writeoff opportunities.
6. Live in a state that does not have a State Income Tax, because not only do you not have to pay the State Income Tax, but you can write off your sales tax, as well (though I think that this may be going away in 2010.)
This was a quick post, and I'm sure there are things that I forgot.
1. The IRS rewards 50's style households (spouse of primary breadwinner earns nothing/little,) in contrast, "modern" two-near-equal income families pay more than they would if theywere both single (though this "marriage penalty" has been mitigated big time by the Bush tax cuts, I believe.)
2. Children can be a big writeoff
3. Home ownership can result in big writeoffs
4. Charitable donations can be written off
5. Small business ownership (incl. Rental Properties) can result in BIG, BIG, BIG writeoff opportunities.
6. Live in a state that does not have a State Income Tax, because not only do you not have to pay the State Income Tax, but you can write off your sales tax, as well (though I think that this may be going away in 2010.)
This was a quick post, and I'm sure there are things that I forgot.
You may be stuck paying some taxes -- and you probably should, given that it's the very rare person who uses no services paid for by tax dollars.
Instead, you may want to consider *which* taxes you prefer to pay. For instance, since the federal income tax guidelines let you write off property taxes, paying a lot of (local) property taxes allows you to pay fewer federal taxes. Ditto with state taxes. No county or state ever started a war with your property tax dollars.
Instead, you may want to consider *which* taxes you prefer to pay. For instance, since the federal income tax guidelines let you write off property taxes, paying a lot of (local) property taxes allows you to pay fewer federal taxes. Ditto with state taxes. No county or state ever started a war with your property tax dollars.
Personally, I think that that's a bad idea. If you are going to invest in stocks, invest in ones where you think your $$$ will grow, not just the ones that pay a dividend. Even the highest yield stocks right now have a dividend of ~8% of the stock price and those stocks are quite volatile (telecom industry, etc.) Let's be careful out there.....
