Updated: Aug 18, 2022
I was scrolling through social media the other day and came across a video that proclaimed "Five Tax Hacks You Should Know!"
Immediately intrigued, I stopped scrolling and lasered in on the content desperately wanting to hear something mind-blowing. As I had suspected, the person on the opposite side of the screen rattled off fundamental and clear guidance readily available and easily accessible to every U.S. citizen.
The content was not a hack, a hustle, or a secret only accessible to the rich and famous - it was the tax code. Nothing more. Nothing less. Needless to say, I was disappointed. I wanted to learn something new, but the video did challenge me to ask an important question:
Why don't more people engage with the tax code?
For starters, the clear answer is financial socialization. Let's be honest. Did you grow up hearing your parent(s) or guardian(s) effusively singing the praises of the IRS?
Many of us were taught to fear the IRS even though we, the people, fund this government function through our federal tax dollars. Some of us were even taught that paying taxes is voluntary. Yes, this language is used in publications related to the filing taxes; however, voluntary, as defined by the IRS, gives a tax filer the option to determine his or her tax liability instead of the government making that determination for them.
In short, filing taxes are kind of like when your mom asks you to do something. You have two options: 1.) You can do it voluntarily or 2.) She is going to make you do it. It's your choice - LOL!
Back to my point.
Many people fail to engage in tax avoidance strategies - to use the tax code to pay no more than you are legally responsible for paying -because they fear the IRS. They don't realize how much power they have. When people feel powerless, they tend to use avoidance to deal with the situation. Avoidance is the natural enemy of financial well-being - especially as it relates to taxation.
So, today, I want to empower you to take your power back and improve your financial well-being by sharing your tax rights with you. You did know that you had rights when it comes to taxation, right?
My two favorites are the ones that state that I, a taxpayer, have the right to receive prompt, courteous, and professional service. My parents never told me that - LOL! I also enjoy knowing that I have a right to pay no more than the correct amount of taxes based on tax rates, deductions, and credits that may apply to me. However, in order to optimize my tax efficiency, I have to engage with the tax code. You do as well, might I add.
So, I want to encourage you to find the time to read the following IRS publications. Remember, you do not have to be an expert with any of this - nor are you expected to be. That's why I am here as well as other professionals. But it is important that you are aware that you have you have more rights and power than you think when it comes to taxation - own it!
IRS Publication 17: Your Federal Income Taxes
IRS Publication 535: Business Expenses