Cut Your Tax Bill in Half! 9 Tips.

Natalie Pace in Powerscourt, Ireland. Photo by: Marie Commiskey.

Cut Your Tax Bill in Half! 9 Tips.

A lot of you have heard me say, “Stop making everyone else rich, including the tax man, the debt collector, the landlord, the gas station, the utility company, the insurance salesman, etc.” Tax season is the perfect time to start keeping more of your dough, which you can then use to invest (money while you sleep), to have more fun, and to buy things you like a lot more than the IRS. Even if you are taking the standard deduction, you’ll want to know about these strategies because many are tax credits that apply whether or not you itemize. Additionally, these strategies can also save us thousands annually in our budget.

Below are 9 tips to start on the path.

9 Tips to Stop Making the Tax Man Rich!

These tips will help you put your best leg forward on the path to financial freedom. See the list below for what applies to you, and then details on each tax credit/deduction below the list.

1.     Health Savings Accounts.
2.     IRA Contributions.
3.     Mortgage Interest Deduction
4.     Student Loan Interest Deduction.
5.     Qualified Education Expenses.
6.     Energy Efficiency and Clean Power Tax Credits.
7.     Charitable Contributions.
8.     Capital Gains
9.     Facing an Audit or Tax Levy?

1. Health Savings Accounts. HSAs are one way to increase your net worth and beautify your bottom line, while giving less to Uncle Sam AND the health insurance company. Health Savings Accounts work best for healthy people. An HSA, combined with a high deductible health insurance, could save you thousands of dollars in insurance premiums each year. The IRS offers an annual tax credit of $3,850 for individuals (and $7,750 for families), which can be invested for tax-free gains. (This increases to $4,150 and $8,300, respectively, in 2024.) The tax benefit is available even if you don’t itemize deductions.

To learn more, visit IRS.Gov and enter Health Savings Accounts in the search box. NOTE that opening a HSA with a brokerage should offer you more investment options than opening the account with an insurance company or bank.

2.  IRA Contributions: You can still contribute to your IRA and receive credit for 2023, up until April 15, 2024. (Roth IRAs are not tax deductible.)

Should you opt for a Roth, a traditional IRA or a SEP IRA? Most people earn more in their working years, when they can most benefit from the tax credit, and less in their retirement years, when they will have to pay income taxes on their traditional IRA (but not their Roth IRA). Peter Thiel reportedly has over $5 billion in his Roth IRA (source: ProPublica). If you are self-employed, consider a SEP-IRA, where you might be able to sock away $27,000 (50+) or $20,500 (under 50) each year. All of these IRAs offer tax-free gains.

Self-directed IRAs offer more freedom of choice in your investments than 401Ks, RSPs, 529Bs, etc. So, rather than just maxing out your employer-offered retirement plan, it’s a good idea to contribute up to the employer match, and then consider maxing out your HSA and personal IRA. We discuss this in greater detail at our Financial Freedom Retreats.

Join us for our Online Spring Financial Freedom Retreat. April 27-29, 2024. Email [email protected] or call 310-430-2397 to learn more. Register by Feb. 29, 2024 to receive the best price. Click for testimonials, pricing, hours & details.

3.  Mortgage Interest Deduction. Mortgage interest paid on a qualified first and second home can be deducted. Click to read the IRS rules. This is a huge tax deduction that allows us to stop making the landlord rich, and pay less to the taxman.
Home prices on a nationwide basis are at all-time highs and are largely unaffordable, so it’s not a great idea to just race out and purchase. (Over 20 million homes were foreclosed on before, during and after the Great Recession.) However, there are opportunities for smart buyers to rethink their housing and to vision and prepare, so that they can create a win-win-win for themselves when the opportunities arise again. These are some of the tools we teach in our Investor Educational Retreats. You can also read case studies in the Real Estate section of The ABCs of Money, 5th edition.

4.  Student Loan Interest Deduction.  If you earned less than $90,000 in MAGI (modified adjusted gross income) in 2023, and you paid on a student loan, you could deduct up to $2,500 of the interest you paid.

5. Qualified Education Expenses. You may be able to deduct education costs for yourself and/or a student in your immediate family. You may also be able to take an early distribution from an IRA without paying the early distribution penalty and additional taxes, if the withdrawal was made to cover a qualified education expense. And if the education is work-related, you may qualify for a Lifetime Learning Credit or a business deduction.

6. Energy Efficiency Credits. If you made energy-efficiency improvements to your home, you could qualify for up to $3,200 in tax credits. If you purchased an electric vehicle or installed solar or wind energy products, you could qualify for a generous tax credit. EV credits go up to $7,500 and wind/solar power products can be as high as 30 percent of the purchase price. The EV tax credit and the Residential Clean Energy Credit are both good through 2032. Certain rules apply to both, so be sure to visit the IRS pages and understand how to dot the I’s and cross the T’s.


7. Charitable Contributions. Your charitable contribution is tax deductible, provided it is made to a qualified 501c3. In addition to deducting your cash contributions, you generally can deduct the fair market value of any property you donate to qualified organizations. It is my experience that donating goods yields a better value in tax credits than you’d earn sitting all day through a yard sale.

8. Capital Gains. It’s important to do as much of our investing as possible in tax-protected retirement accounts. Doing so can eliminate capital gains taxes, which can be up to 37% for short-term capital gains. Did you know that you can even invest in real estate in your IRA? Email [email protected] to learn more.

9. Facing an Audit or Tax Levy? Hire an experienced, qualified accountant to review your case and communicate with the IRS on your behalf. As Wayne Layton, CPA, reminds us:

"From time to time the IRS may suspect an error on a tax return or underpayment of tax and       send my clients a letter assessing additional tax, along with penalties and interest. Most        taxpayers become fearful upon receiving these letters as some of them even refer to liens and levies. Out of fear, many people just write a check to the IRS. As I see it, the letters from the IRS are simply telling the taxpayer to pay or prove why you do not owe the balance. There are many times that, on behalf of my clients, I write a letter disagreeing with the IRS’s position, attaching proof of why the taxpayer does not owe the additional tax, and the additional tax assessed is either reduced or the balance is adjusted to zero."
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Sometimes the IRS will agree with the accountant and adjust the balance due. Other times, if there is a good reason, the IRS may waive the penalties. And, of course, there may be times when you have to pay everything the IRS claims is owed. Most importantly, do not simply write the check before discussing your options with a qualified Certified Public Accountant.
 
Bottom Line
You don’t need to itemize deductions to take a tax credit. Many of the above tax benefits are available whether or not we itemize, and almost all of them offer additional savings in health premiums, capital gains taxes, utility costs, housing, gasoline and more. We can live a much richer life when we learn how to keep more of our money and stop making the taxman and billionaire corporations rich at our own expense.


Join us at our April 27-29, 2024 Spring Financial Freedom Retreat. Learn how to invest and grow your wealth, green your retirement plan, easy and efficacious nest egg strategies, how to get hot and diversified (including in artificial intelligence), and what's safe in a Debt World. You'll even discover how to save thousands annually with smarter big-ticket choices. Yes, it's a complete money makeover. 
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Email [email protected] to register. Learn the 15+ things you'll master and read testimonials in the flyer on the home page at NataliePace.com. Register by Feb. 29, 2024 to receive the best price. ​

"Ten minutes into the first day I was already much smarter about investing than I ever thought I would be in my life and I knew I was in exactly the right place at this retreat. I am amazed at how EASY and FUN it is to make my money work for me and those I love. I think this kind of information should be compulsory in schools. I wish I'd learned this sooner." CM

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Join us for our Online Spring Financial Freedom Retreat. April 27-29, 2024. Email [email protected] or call 310-430-2397 to learn more. Register by Feb. 29, 2024 to receive the best price. Click for testimonials, pricing, hours & details.

Join us for our Restormel Royal Immersive Adventure Retreat. March 7-14, 2025. Email [email protected] to learn more. Register by April 30, 2024 to receive $200 off the regular price. Click for testimonials, pricing, hours & details. There is very limited availability, and you must register early to ensure that you get the exact room you want. This retreat includes an all-access pass to all of our online training for a full year for two and three 50-minute private, prosperity coaching sessions!

Natalie Wynne Pace is an Advocate for Sustainability, Financial Literacy & Women's Empowerment. Natalie is the bestselling author of The Power of 8 Billion: It's Up to Us and is the co-creator of the Earth Gratitude Project. She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). Her book The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical), with over 120,000 downloads and a mean 5-star ranking. The 5th edition of The ABCs of Money and the 2nd edition of Put Your Money Where Your Heart Is are the most recent releases of these books. Follow her on Instagram. 
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Natalie Pace's easy as a pie chart nest egg strategies earned gains in the last two recessions and have outperformed the bull markets in between. That is why her Investor Educational Retreats, books and private coaching are enthusiastically recommended by Nobel Prize winning economist Gary S. Becker, TD AMERITRADE chairman Joe Moglia, Kay Koplovitz and many Main Street investors who have transformed their lives using her Thrive Budget and investing strategies. Click to view a video testimonial from Nilo Bolden.​

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Important Disclaimers
Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly traded companies or funds mentioned by Natalie Pace are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect a diversified strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.  

Information has been obtained from sources believed to be reliable. However, NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.