Tax Time Bragging Rights

[JLeezer]

Ok. I'm not usually one to brag about anything I've done, but I just about have my taxes wrapped up and I'm amazed at the outcome. For the longest time growing up, I always told my dad that I wanted to not pay income taxes, legitimately. And every year he told me that you have to pay taxes. So then I'd restate what I had said as, "I want to pay as close to no taxes as possible." Kind of an odd statement to be heard from a young kid year after year.

So, now at the still somewhat young age of 25, I've done it. With the two rental properties we own, plus the Lifetime Learning Credit because my wife is in school, I reduced my income tax to the lowest amount I think it will ever be.

So I thought I'd start a Tax Time Bragging Rights thread for everyone to share their successes against the IRS. If, along the way, you find yourself wondering how anyone reduced their tax liability as much as they have, ask them. I'm sure we can all get a lot of new ideas out of this for next year.

For me, here's my breakdown:

1. Our total income was reduced from nearly $60k to $40k due to our rental properties (gotta love depreciation!)
2. We had $3k in adjustments to income from HSA contributions and moving expenses
3. We took the standard deduction
4. We took our two exemptions
5. This left us with taxable income of only $20k, resulting in a tax liability of $2214
6. This is the icing on the cupcake: the Education Credit I referenced above was $2k and another $200 credit was available for Retirement Savings Contribution

The resulting actual tax liability was $2214 - $2200 = $14!

If you then figure out the actual tax rate, it is $14 / $59000 =

0.00024% or 24/1000 of 1%

Go ahead, share your story. But only include as much as you're comfortable sharing.

[JLeezer]

Really? Nobody has any fun stories to tell about doing their taxes?

[jasaunders]

Well you only gave people 2 hours to answer.

Or are you just trying to bump your post?

[JLeezer]

No, I'm just bored at work. My bad.

[rogercbryan]

Never brag about success against the IRS.. it makes you a target...

[JLeezer]

Never brag about success against the IRS.. it makes you a target...

I don't see a problem with being a target if I'm well within the existing court rulings that substantiate the tax code. Now, if I'd been messing with the numbers, that's a whole different story.

[warrensway]

the IRS owns my soul ... ouch

[HarveyJ]

Not bad... You should try tracking down Kerry Packer's accountant.
That SOB owned Australia's 2nd largest media network, had an 8 figure income (although he DID create every one of those media outlets from the ground up and diversified intelligently, so I guess he deserved it) and managed to never pay more than 3 figures in annual income taxes after 1986 or some such.

[JLeezer]

Not bad... You should try tracking down Kerry Packer's accountant.
That SOB owned Australia's 2nd largest media network, had an 8 figure income (although he DID create every one of those media outlets from the ground up and diversified intelligently, so I guess he deserved it) and managed to never pay more than 3 figures in annual income taxes after 1986 or some such.

Never heard of the guy before, but thanks for the tip off. I'll definitely take a look. I love learning about business people.

[1entrepreneur]

That's pretty impressive.

[tazman9r]

One word - Liability

If you have the kind of financial liability that taxes allow you to write off, your golden. If you don't, you spend a bunch. Here's the question. How much of that 60K did you have to put back into your properties.

Is the education credit the write off for interest on a student loan?

Here's the other thing. At 60K, your still in that 15% window. I think the cut off is like 70 or 75K, where you make the jump to like 23%. There are two things that are inevitable in life, death and taxes. Props to you for being able to whittle it down so low because you own those rental properties. Hence the infamous phrase by Leona Helmsley, "Only the little people pay taxes." If you have a regular job, or like me, you don't have the write off's, then you pay much more in taxes, or pay to have them prepared.