Hey. I'm trying to find ways to reduce my taxable income in NYC. Other than 401k, buying an investment property or having kids, I can't think of any good ways to severely offset the taxable income. HSA/FSA is only like 5k... What am I missing? It feels like everyone is gaming the system except me.
Take fake deductions and file a theft complaint with the local police claiming your donation receipts were stolen :-p
You make so much. Just pay your taxes.
I'd be okay with this if everyone was paying this fairly, but instead those that can cheat the system. Also, it isn't worth it in NYC. The taxes are higher for what? A terrible subway system and dirty streets?
Would u rather not have subway system?
I heard if you travel/work in different cities that you can claim their tax rates for time time you were in the city. Does anyone know if there is truth to this?
If you travel to another state technically you need to file a tax return in that state declaring the income earned while you were there (like, a portion of your salary). And depending on the income and state, you might need to pay taxes there. The American tax system is really broken.
Being from California, wouldn't this be in my favor since we pay a lot in taxes?
2nd residence, my CPA says you can have 2!
Investment property isn't a very good way to reduce taxable income for most people. You either make money on the rental and pay more taxes or lose money on the rental and pay the same taxes you did before. If you aren't a real estate professional, you can't use passive losses on your investment property to offset your w2 income. A business where you can show losses on paper while building equity is a good approach, but real estate can be a hard way to do that.
You can take depreciation as an expense but if you sell you pay it back in capital gain later, so depending on your tax rate it may or may not be good deal for you.
Depreciation offsets the income on your rental, not your day job, so it's still not great for the OP's original question. The best plan I've been able to come up with is buying run down properties, sink money into improvements to keep them cashflow-neutral, sell, roll the proceeds into an new property, repeat. You can avoid taxes indefinitely with this and pass it to your kids for the biggest loophole of all: they get to sell it with no capital gains.
Having kids to save tax? Yes you would save on taxes but be ready to lose the principle, lol.
You can ask for a decrease on your salary. For sure that will lower the taxes you have to pay.
Look into deductions for charitable giving. Especially donating appreciated stock. If you are not sure about the charity yet, get a donor advised fund.
If you have children, start 529 plans for each and contribute till you hit the target.
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Primary residence (price increase) is the biggest break (500k). Other than that, most investment gives u capital gain, including after tax 401k.