REDUCING YOUR TAX BURDEN - There is no "right" answer
01 Sep 19 - By William Truax
The amount of income tax you pay is not fixed. Different people making the same amount of money can pay substantially different amounts of income tax. To reduce your income tax burden as much as possible, you need to...
Reducing your Tax Burden -
THERE IS NO “RIGHT” ANSWER
The amount of income tax you pay is not fixed. Different people making the same amount of money can pay substantially different amounts of income tax. To reduce your income tax burden as much as possible, you need to use to the best advantage the laws, regulations, court decision, and rulings issued both for your guidance and your compliance. All of these sources provide usable and acceptable techniques to help you reduce your tax burden as much as possible.
There's a decent chance a tax break that can work for you exists out there, but that you either don't know about it or haven't been able to take advantage of it. We say a decent chance because of the sheer number of the different tax breaks available these days.
Both the Federal and State governments, along with some municipal governments, have set themselves up as your de facto partners in any productive activities you might engage in. They're your partners whether you want them to be or not. They're positioned so as to be able to take a portion of your income, while writing the rules under which they can do this. Still, there are protections and relief available to you and about which you should be knowledgeable in order to take full advantage. Many of these items are designed to ease the tax load of one articular sort of taxpayer or another. Others are the result of interpretations of well-established laws.
One rule these governments have written to their benefit is that, when it comes to tax matters, they're right, unless you can prove them wrong. For example, unless you can prove otherwise, the Internal Revenue Service is presumed correct in its determinations, no matter how lunatic or uncaring they might seem. Proof, in these cases, almost always comes down to documents or documentation.
The standard of proof used in most tax cases is “clear and convincing evidence.” One must now, by clear and convincing evidence that even skeptic would believe – that your take on what happened is correct and that the IRS is factually wrong. Your word on these matters, while important to you, is usually not enough, since most IRS agents, Appeals Officers and judges consider your word not very convincing. So, the proof you need will usually be contained in documents: canceled checks, credit card bills, appointment calendars, closing statements, invoices, statements, letters acknowledgement, repair bills, and similar items. These are your first line of defense and should be held onto (even if you find that annoying). Otherwise, you could find yourself effectively defenseless before the might of the tax collector. Having these things, you can stand up to the colossus and win the day.
Taking advantage of this sort of data is important in working out your personal and business affairs. In any given year, you might arrange your affairs so as to pay more or less in the income taxation, depending. By knowing the rules, you can take best advantage of the protections available to you and keep your overall burden as light as possible.
© 2014. William D. Truax, E. A., Inc. All Rights Reserved
Mr. Truax has been a tax practitioner and financial consultant in priivate practice for over thirty years. He is admitted to practice before the IRS and all state tax agencies and is also a member of the
Bar of the United States Tax Court. As a fellow of the National Tax Practice Institute, he is an Accredited Tax Advisor and a member of the National Association of Enrolled Agents. Mr. Truax was a founder and Director of Professional Business Bank in Pasadena, CA (now Bank of Manhattan), and was chairman of the bank’s investment committee, responsible for control and oversight of over $100 million in bank assets. Mr. Truax has been active in numerous philanthropic endeavors and is currently a trustee or a board member of several active charitable organizations. In addition to his tax and
financial expertise, Mr. Truax holds a music degree and has performed with major symphony orchestras.