(I was feeling a little frisky today, so this one is fun….)
Several years ago I wrote a post with a rather obnoxious title, Never Pay Taxes Again, in which I outline our strategy to minimize our tax burden in the years to come. It is still one of the most popular posts on this rather obnoxious blog.
Then I recently outlined how we’ve paid no income tax for 4 years while increasing Roth accounts from $0 to $100k and raising basis in our stock portfolio by $145k. Not only was this all tax free, but will be tax free forever.
As you might expect, quite a few people have taken time out of their busy schedules to express their opinion about the taxes of a guy who writes stuff on a blog. There is something truly magical about the Internet that encourages this kind of sharing.
The strongest opinions seem to come in 3 main forms:
Every year, Americans pay millions of dollars in extra tax. Because they are concerned about or fearful of an audit, they decline to claim deductions they are fully and legally entitled to. This is the Fear Tax.
Because I write a lot about our own tax minimization efforts… (Yeah… sorry about that :/ ) I get more than my fair share of commentary in this regard:
“The IRS is coming for you, man!”
“OMG!!! You are going to get audited!!!! Ahhhhhh……!!!!!”
It’s totally worth it though, because I’ve learned a great deal and saved big dollars as a result. But also because these conversations often lead to great discussions about tax law, ethics, fairness, government accountability, and civic responsibility.
Maybe we can have another one of those helpful discussions…? This time, about the Fear Tax.
Bloggers, digital nomads, side hustlers, and business owners have more opportunities for tax savings than the average employee. One of my favorites is the ability to turn stuff you already have or were going to buy anyway into beautiful tax deductions through depreciation.
Have an extra room in your house? Write it off. That computer you once used for Facebook but now use to write blog posts and manage investments? Write it off. The smartphone you use to populate your Instagram feed? Write it off. The new SLR camera and lenses you plan to use to share details of the nomadic lifestyle? Write ’em off!
There is nothing better than having Uncle Sam help pay for the stuff you need for your business.
Naturally this ability to write it all off is a superpower that is rife for abuse, so the IRS has a whole mess of rules to follow. But as with all rules, there are always ways to optimize to your advantage. In this post I walk through the opportunities, gotchas, and strategies for depreciation write-offs using some common side hustle tools and equipment.
After visiting 16 countries in 16 months we are back in Taipei, Taiwan for the next year or so. A rental property we stayed in awhile back was available once again and the landlord was happy to have us move back in. It always pays to be a good tenant.
Even better news, this apartment has a room we used only for storage. So I turned it into a tax deduction.. err, I mean a home office.
At FinCon 2016 (read my review) Jr was a shrewd negotiator in several business meetings, and an immaculate host for our guests on the houseboat. Clearly he is ready to step out of the shadow of his parents and build a place for himself in this world.
We discussed at length what opportunities would be the best fit for his skill set and experience. It has always been my goal that we coach him to be a problem solver and risk taker. Rather than asking what he wants to be when he grows up, we might ask “What improvements to the world would be most exciting for you to pursue?”
That must have been a little deep, because he just smiled and tried to look cute. And then it dawned on us…
