Are Taxes Fair?
The answer to that might surprise you.
Because, for the most part, the answer is yes. However, sometimes they are only fair if you know how to “play the game”. Most people think only the wealthy can avoid paying income tax because they know how to play the game. Well, at a much lower level, everybody knows some of the tricks to “playing the game”. For instance, you might be contributing to your 401(k) at work. Well, you’re playing the game. However, you might not know that even though you’re contributing everything you can to your 401(k) at work, you’re still allowed to open an additional private IRA, and take another several thousand dollars off of your taxable income. That trick is “knowing the rest of the rules to play the whole game”.
Or, you might know that you can deduct a home office for your small business. Many people use the simplified method and take the IRS’s flat rate per square foot. That’s playing the game. But what you may not know is you don’t have to use the simplified method. You can do a long form, 8829 Home Office Deduction, and take a prorated portion of your mortgage bill, property taxes, utilities, cell phone, internet, the kid who mows your lawn, the guy who plows your driveway, and so on, and get a much larger deduction. Why doesn’t everyone do that? Because it takes the tax preparer an extra 10 minutes, and their attitude, for the most part, is next, next, next, let’s get it done fast so I can get paid by the client. This information is pumped into every tax preparer’s office by the IRS, also by their software manufacturers, and by outside education third parties like the AICPA. They just have to take the time to want to be great at their work, instead of just okay.
Are taxes fair?
Yes, if you learn to play the game the right way, there are plenty of tax reduction opportunities and a fair tax result can be had. But, if you only play half the game, you only get half the fairness. How do you learn to play the whole game without becoming a tax nerd and spending 40 hours in classes? Quite frankly, the IRS does not hide the special rules to play the game. This is all public information. The problem is that the average person doesn’t have the time or interest in learning all the rules. So, what do you do? Well, you don’t go to a tax preparer, you go to a tax planner. Tax planners, often financial advisors, CPAs with certain designations, even attorneys, have taken the time to learn how to play the whole game on behalf of their clients. Search out a tax planner. Play the whole game and you can achieve a fair tax outcome.
Signature America Wealth Management can help you with tax planning to be sure you are are getting the most out of the tax code.