Ideally, April should be a blissful time. The end of a semester, the beginning of summer, flowers and bunnies all lighten the season. But there is one thing that, for many people, makes April a dreaded month: taxes.
Really, they’re not as bad as they seem to be, but the stigma surrounding tax season makes it hard for anyone to file their 1040. There are very few ways that taxes can be avoided altogether, but that doesn’t mean we can’t try.
1. Don’t make money. Or just be sure to make less than your standard deduction every year. For example, for the tax year 2007, a single person’s standard deduction was $5,350 dollars. If they didn’t make more than that, and didn’t have any withholding, they were not required to file a tax return. These numbers change every year, and are different depending on your marital status, so be sure to check irs.gov for more details.
2. Move to a taxless state. States such as Nevada and Florida don’t require you to file state taxes. And even though a taxpayer’s state return is usually of less financial consequence than their federal, it can be very emotionally rewarding to only have to file a federal return.
3. Don’t buy things. Sales tax is usually less painful, but it isn’t something to be ignored if our goal is to stop paying taxes entirely. Sales tax is different in each state, so if you absolutely have to buy something, consider moving to a different state with a lower sales tax percentage.
4. Have babies. Children are the best tax break that a person can have. If one parent stays at home with a baby (who is twelve months old or less), they get a non-refundable credit of $100 on their Utah tax return. Child tax credit usually means an extra thousand dollars per child. If your income is within the correct bracket, earned income credit can get you up to $4,500 back. You can also claim earned income credit if you are single, but it tops out at about $400.
6. Itemize your deductions. Remember the chat we had about standard deductions? Well, if you can’t follow that rule, you can at least try to itemize your deductions to a point where it levels out your taxable income. Over the year, keep track of your medical expenses, personal property and real estate tax, mortgage interest, unreimbursed employee expenses, tax prep fees, and casualty and theft losses. Usually a person can’t itemize unless they have a mortgage, but that shouldn’t stop you from trying.
7. Man up to the consequences. If you flat-out refuse to pay tax, you can expect that the IRS is going to come after you. And then there will be fees and interest to pay. They do this because it’s not like they can restrict you from using government services if you don’t pay taxes. We don’t have the threat of our children being kicked out of public school or our cars being barred from the highways hanging over our heads, so they have to persuade us to pay by implementing fees. And you can bet that they will.
8. If you just can’t get around to paying, hire an accountant. Don’t let him tell you how much you had to pay, just have him take care of it. Out of sight, out of mind, right?
*Mel Sundquist is a professional tax preparer.