With recent changes to tax laws, many Americans found themselves with much smaller tax refund for 2018 than they anticipated. While most chalk it up to the belief, “that’s just the way government and taxes work,” others are more upset. Believing the government is out to rob you of your hard-earned money is a limiting mindset. In reality, the government wants you to reduce your taxes. Meaning, they want you to reduce your tax liability.
Don’t believe me? Look at it this way. The United States’ tax law contains over 5,800 pages. Of those pages, only about 30 of them contain content related to the definitions of income (raising taxes). That’s only 0.5%! The other 99.5% of the tax code is designed to save you money. With such a large portion of the tax code focused solely on helping you save money, it’s clear the government wants you to reduce your taxes. Even more so, you have an obligation to pay the least amount of taxes that the government allows.
Taxes Influence Behavior
In addition to being designed to save you money, the tax code also impacts our behavior. The rules and laws exist to shape the decisions you make regarding your money and lifestyle. The goal is to influence decisions that not only benefit you but also help you reach your big picture goals. This is done by providing an incentive to citizens for certain actions and behaviors.
For example, in an effort to discourage smoking and drinking, tobacco and alcohol are heavily taxed. The incentive here is to avoid drinking and smoking to save money and live a healthier life. In contrast, the government offers incentives to people who make charitable donations. Those who do so are offered a tax deduction. Charitable contributions also help donors feel good about supporting a cause aligned with their morals and living a more philanthropic life.
How to Legally Reduce Your Taxes
Reducing your taxes may sound complicated but it doesn’t have to be. The key is to understand how you can take advantage of the legal options available to you. Working with Sage Wealth Strategy is a great starting point. A good wealth strategist, working in conjunction with your tax advisor, will help you identify how to make the tax code work for you and your financial goals.
To start, Sage Wealth Strategy will work with you to identify what those goals are. For many, this can be planning for retirement or as simple as optimizing your portfolio. Next, we will look at your current wealth growing strategies. Doing so creates a clearer picture of how your current strategies are helping or hurting you and offers a starting place for making adjustments.
At this point, Sage Wealth Strategy will develop a customized strategy that aligns with your goals and lifestyle. Many times, this means taking advantage of incentives offered by the tax code while also using a combination of the two economic powers: economic investments and insurance-based financial products. These financial products may include investing in a properly structured whole life insurance policy and utilizing the Infinite Banking Concept.