{ "media_type": "text", "post_content": "What do my other FIRE friends (located in the US) do to lower their tax bill beyond the typical maxing out the 401K, IRA, HSA, and to a lesser extent 529 plans? As my spouse and I increase our salaries we are looking for ways to lower our taxable income.", "post_id": "6109f411cd33e7002103b660", "reply_count": 18, "vote_count": 5, "bowl_id": "5b3f7377ab53db00136f7b4c", "bowl_name": "FIRE Financial Independence Retire Early" }

What do my other FIRE friends (located in the US) do to lower their tax bill beyond the typical maxing out the 401K, IRA, HSA, and to a lesser extent 529 plans? As my spouse and I increase our salaries we are looking for ways to lower our taxable income.

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Tax fraud is one option

funnylikeuplifting

Side hustle with expenses (like a rental property) can absorb a lot of expenses. Lots of work tho

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We purposefully send our daughter to camp at a nonprofit/religious center so we can get tax deductions because they bill us as a contribution rather than tuition

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Don't you have to deduct the value of camp?

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2021 - $300 charitable contribution deduction for those that don’t itemize

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Become a 1099 contractor so you can deduct expenses. 401k contribution alone is 56k you can deduct on Schedule C

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Examples?

And, if you can, buy a house in a state with no income tax and work remotely. WY or FL. I personally left NY for FL and pay no state income tax, and since all my income consists of distributions from LLCs that own real estate, I’ve legally reduced my tax bill to zero.

likesmart

DM me if you want to discuss further, but I only distribute, well, distributions, on equity stemming from our rents in property we own on an as needed basis, so I never get taxed on the stuff that stays in the firm bank accounts. State law might be different, but that’s why I spend 182+ days in FL where there is no state income tax. Plus real estate has its own perks as opposed to other investments. There is a reason our former President didn’t want to disclose his tax returns. And it’s not about his wealth (tax returns tell you nothing about wealth). My view is it is because he didn’t want to disclose how little he pays in taxes. Which is all legal, by the way.

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Goal is get way beyond the top tax bracket. At that point, a big number with a deduction is still a big number. But that's why I do sales - I only care about top line

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Schedule C baby. Works for 5yrs before the IRS says it’s a hobby.

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