Money Monday Tip #5
“Only the little people pay taxes.” Leona Helmsley
Actually only the little people who want to stay out of jail or trouble pay taxes. We’re all familiar with the quote: “there are only two things certain in life, death and taxes.” It’s true, you will die and you will pay taxes.
While there is nothing you can do about death, there are some things you can do now to pay less in taxes. Here are at least two tax-deferred accounts you should take advantage of if offered by your employer:
Flexible Spending Account. “A Flexible Spending Account, or FSA, is an employee benefit program that allows you to set aside money, on a pre-tax basis, for certain health care and dependent care expenses. That means YOU keep MORE of your MONEY.” I have a flexible spending account and I love it. It reduces my taxable income and it pays for medical and dependent care expenses that I incur during the year anyway.
401K. “A 401(k) plan is a type of tax-qualified deferred compensation plan in which an employee can elect to have the employer contribute a portion of his or her cash wages to the plan on a pre–tax basis.” I also have a 401K Retirement Plan through my employer for the tax deferred benefit and money in this account also reduces my taxable income.
There are several tax-deferred (and after tax accounts such as the Roth IRA) vehicles out there for you to enroll in. The important thing is to research them, be aware of them, talk to your financial advisor and find out which ones work for you!
So yes, even the little people have to pay taxes because it is the law, but if you know where to put your money, you can soften the blow. You can’t outsmart or outrun the IRS, they will dig you up out of the ground just to check your pockets and make sure they got everything.
Just remember, never put money in something you don’t understand and always understand where you put your money!
I am not a tax professional and these tips only offer guidance, there is more to them than I can cover here. Please consult your accountant, financial advisor or planner, they will be happy to hear from you. If anybody from the IRS read that last comment, I’m sorry, that was purely for emphasis only, but you have to admit, it was funny.
Photo credit: Unknown. It’s not mine, I got it off the web, but unsure who to give credit to.
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My name is Valerie aka Natural and I will be writing about whatever is on my mind. I love teaching, dialogue, sharing and making people laugh. I never know what I'll share here but this is me, Thinking Out Loud.
I shall restrain myself from my usual tax rant..it’s difficult but I will….
Awh, come on Robert, let it rip. Rant!
I will try and fill in where robert failed, the IRS was set up to tax territories–not states. The states can tax us but ‘income’ tax is also unconstitutional. I have taken enough history courses and read enough on the topic to know that there is no real reason to pay taxes except intimidation. I have an acquaintance that did not pay taxes. He went to court on the matter and spoke of all the reasons that taxation did not apply to him and he hasn’t paid taxes since the 80s . Income taxes that is…we all have to pay taxes all the time unfortunately.
Hi Joe,
In my research, I did come across that at one time, income tax was considered unconstitutional, but through intimidation we pay up. Truth is, the IRS does have the authority and power to take whatever they want, like they own it. I don’t like it, but I do like my freedom. Btw, what’s the name of your friend’s book. If he gets out of paying income taxes, I need to know how.
any tax dodge should be awarded a medal..by the way I tagged ya…:)