This Week's Money Talking Points
1. How can we avoid taxes?
When it comes to avoiding taxes, there’s a right way and a wrong way, and we're only talking about the legal kind of avoiding! Kyle and I dove deep into smart tax strategies that everyday people can use to reduce what they owe. Retirement accounts are the obvious place to start: traditional 401(k)s and IRAs can reduce your taxable income today, while Roth accounts give you tax-free growth and withdrawals later on. And then there’s the triple-tax-advantaged gem, Health Savings Accounts (HSAs). If you’re eligible for one, an HSA might just be the best-kept secret in tax planning. It goes in tax-free, grows tax-free, and can come out tax-free. That's the tax trifecta, and it's not just hype; my wife and I use it ourselves and have saved a ton.
We also talked about strategies like bunching charitable deductions and capital gain harvesting! If you’re in a lower income year or still early in your career, you might qualify for the 0% capital gains bracket, which means you can sell certain investments and owe nothing in taxes. It’s a lesser-known trick, but one with a big payoff if you’re proactive. Taxes might feel like a necessary evil, but when you plan ahead, they become a huge opportunity instead of a burden.
2. Should I avoid making more money to avoid paying more taxes?
Short answer? No, absolutely not. One of the biggest myths Kyle helped bust is the idea that making more money means you’ll somehow end up with less after taxes. That’s not how our tax system works! We have a progressive tax system, which means only the extra dollars you earn get taxed at a higher rate, not your entire income. So when you get a raise or bonus, you’re not losing money; you’re just growing your income and opportunity. That’s always a win.
In fact, making more money opens the door to more tax-saving opportunities, not fewer. You can max out retirement accounts, invest in real estate, or start a business, each with its own set of tax advantages. I also loved Kyle’s reminder that it's not about minimizing taxes in one year; it's about minimizing your lifetime tax bill. More income gives you the flexibility to make smart financial moves that pay off for decades. Don’t let tax myths hold you back from earning more! It’s better to have 50% of something than 100% of nothing.
3. How can taxes be simpler?
Taxes don’t have to be complicated! But we often make them that way by ignoring them until it’s too late. One of the best takeaways from my chat with Kyle was that tax planning is something we should think about year-round, not just during the frantic weeks before April 15th. Simple tools like the IRS Withholding Estimator can help you dial in your W-4 at work to avoid massive refunds or unexpected bills. And guess what? That giant refund might feel nice, but it’s really just an interest-free loan you gave the government all year long. Let’s keep that money working for you instead.
When your financial situation gets more complex, like if you start a side hustle, buy a rental property, or earn over six figures, it may be time to call in a pro. A good tax professional isn’t just there to file forms; they’re there to help you strategize and save. Don’t be afraid to invest in premium advice. It usually costs a lot less than a premium mistake. And remember, taking it one step at a time is the best way to make taxes feel less overwhelming. You’ve got this.
This week's Money Buddy
Kyle is a CPA who specializes in helping small business owners uncover larger tax savings while reducing the time typically associated with taxes. His clients say they enjoy working with him because he keeps things simple & efficient. He has helped clients identify tens of thousands of dollars in tax savings. Today, he is going to help us determine the reason why we need to be thinking about taxes more than once a year!
Enjoy your week and get out there and have a money talk!
