WINNING THE TAX GAME
This year the Wise Financial Man is pleased to say he will be on the winning side of the tax game. You see one of the biggest things people overlook is their taxes. A mistake that can literally cause you thousands of dollars! Now right off the back I want to state that I believe in paying what is owed to Uncle Sam. No more and no less! With that being said, people need to look at their taxes and verify they are not missing any tax breaks that they may have. We already pay enough in taxes and need to play the tax game smart.
A perfect example of this is prior to me marrying my wife Rebecca, at a time when we were both filling single, she went in for her annual tax appointment. Obviously being a student at the time and still being a student now, her main focus was on school and earning the best grades she could, in which took most of her time. Good grades typically require a lot of studying. The result of her hard work in school and little free time was a low annual income. When she went in for her tax appointment, her tax accountant informed her of the American Opportunity Credit. The American Opportunity Credit which allowed her to claim a tax credit up to $2,500. That was a tax credit that neither of us knew about. But luckily we had a good tax accountant.
Another good example of people overpaying on taxes are couples that make good money, live together, and plan to get married however year after year hold off. If you are having doubts about getting married that's one thing. However if you are planning on getting married, then you are missing out on a great tax break and are loosing the tax game. You need to get married!
Below is a chart on the 2019 tax brackets. You can see being married can give you a bigger tax break. Especially for families in which one spouse does not work or does not make as much as the second one! Don't believe me. Just take a look below!
Say one spouse does not work and the other spouse makes $100,000 dollars. Technically if you filled single, your income would be taxed at higher tax brackets pretty much all the way up the tax brackets with the last $84,201 to $100,000 (or $15,799) being taxed at a 24% rate.
Now if you filled married under the same circumstances, you would be taxed at a much lower rate, with the majority your income being taxed at a 12% rate. The highest tax bracket you should be taxed at under the same circumstances should be 22% with the last $78,951 - $100,000 (or $21,049) being taxed at a 22% rate.
Additionally if you filled single your tax deduction would only be $12,200 as opposed to filling married, your tax deduction would be $24,400.
Now putting this to use in simple terms without any other tax breaks, and going straight off of the tax bracket chart provided above... A person filling single as opposed to married in which one spouse makes $100,000 a year, and the other one makes $0:
Single taxes owed for 2019: $15,246 dollars
Married taxes owed for 2019: $8,684 dollars.
You would pay nearly 43% more in taxes or $6,562 dollars more in taxes.
That's a whole lot of money if you ask the Wise Financial Man. Imagine having $6,500 to invest or pay off debt! Just imagine how nice that would be!
(Now people need to realize this is just for federal taxes. You will still need to pay your own state taxes which are different for every state!)
Back to the federal tax game, one should be able to see the benefits of filling married jointly. And that is why one of the Wise Financial Man's biggest pet peeves is people who plan to get married, have accounts together already, and live together that don't get married who are missing out on the possibility of a huge tax break!
Note: You could have gotten married anytime in the year 2019 and been able to file jointly!
Ask me how do I know?
Because that is exactly what happened to the Wise Financial Man! As many of you know, in September of 2019, I married my best friend and fiancé Rebecca! After verifying with my tax accountant, he stated as long as the marriage was completed in the year 2019 and the marriage certificate was turned in, I would be able to file my taxes as married filling jointly!
Now with Mrs. Financial Woman being in college, you can see the amazing tax break we will be receiving this year. And no, we are not cheating Uncle Sam. But rather are playing the financial game smarter, and as a result are paying less in taxes winning the tax game.
With the tax laws changing significantly over the past few years, from where individuals were able to write off a whole lot of items, to the now tax laws in which the standard deductions are higher along with the tax brackets, one needs to play the tax game smart. Stop cheating your self and paying Uncle Sam more than he needs! You already pay enough!
Now I understand THERE IS NO SUCH THINGS AS A FREE LUNCH (TINSTAAFL). I understand all of the government programs, the economy, the military, and all of the other expense that come with this Amazing Country do cost something... But remember when you are a hard working American struggling to build your wealth and join the path to financial freedom, you need to play the tax game to win. All of the successful millionaires and billionaires are playing the tax game to win, and you need to play to win to!
Now fair warning I am not a tax accountant or a financial manager and always consult with a professional tax accountant. But I can tell you one thing! The Wise Financial Man is playing the tax game to win! And you need to play to win to! Don't let Uncle Same rob you in 2019 and 2020! Get your self a good tax accountant, and play the tax game to win!
***Remember more expensive tax accountants don't always equal better results***
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