Tax Filing questions

[MCA975]

Hello. I am a Florida resident with questions on the best plan for filing 2108 taxes by lowering my adjusted gross Income as efficiently as possible.

I am filing Head of Household with one dependent and my income will be 90k from w2, I have another 120k from a business I sold and I am also getting a K1 with 182k from the business this year. Now this is going to put be at approximately 392k for the year and put me into the 35% tax bracket. While I still have time, what can I do to drop myself into a lower bracket? Any suggestions or anything I can do or purchase to help?

Thanks

 

[Taxing Matters]

Hello. I am a Florida resident with questions on the best plan for filing 2108 taxes by lowering my adjusted gross Income as efficiently as possible.

Well, I'm pretty sure I won't be around in 2108, and have no idea what the tax laws will be that year. If you already know your income for that year, you have a great crystal ball.

I'll assume though that you mean 2018 instead.

I am filing Head of Household with one dependent and my income will be 90k from w2, I have another 120k from a business I sold and I am also getting a K1 with 182k from the business this year. Now this is going to put be at approximately 392k for the year and put me into the 35% tax bracket. While I still have time, what can I do to drop myself into a lower bracket? Any suggestions or anything I can do or purchase to help?

The options for reducing individual income tax are limited here, and some of those options will depend on the details of the income you are getting from the business and sale of the business. If you have significant capital gain income and assets sitting around that have unrealized capital losses you might sell/dispose of those assets to trigger the losses so you can offset the capital gains.

But buying some new asset for personal use won't get you any deductions against that income you have. If you were thinking about starting a new business and can do that now, meaning get it up and running quickly, then you may benefit from buying things you need for the business this year rather than waiting until next year.

There are various personal deductions you might be able to use, but I always caution that spending money just to get a deduction is not smart -- you end up spending more money than you save in tax. But if the expenditure is something you may need or want anyway then it might be wortwhile to ensure you do it before the end of the year to reduce your taxable income. There are too many to just list here and the existing tax publications the IRS has are for 2017 and thus are out of date because they do not reflect the changes from last year's tax bill. You might want to meet with a tax attorney or other tax pro to go over your total circumstances and get recommendations of things that would help you.

 

[HRZ]

I agree...don't let tax reduction take over the scene .

However, if you expect to create a new business it might make sense to accelerate its existence into 2018 and front end load as many expenses /deductions as the law permits and as make practical sense ...with keen attention to section 179 provisions