Made roughly 250k this year what can I do about taxes?

[parkerscott]

I make about 35k a year pre tax after doing countless hours of overtime, and I did very well this year on an investment.

I have never had to deal with this amount of money in my life, and I would like to keep most of it. Unfortunately do to the nature of the investment, I had to pull my money early so now im subjected to short term capital gains.

What can I do about taxes? Can I put the money in things like IRA's etc to reduce the tax burden? I would like to go back to school, and buy a house at some point also, but if the tax man is taking 40% im going to have to take life a little bit slower. Only in America can you make a quarter of a million and instead of being happy, you have to worry about how hard the tax man is going to rob you.

 

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[kkoasdfawfqwe2]

Only in America can you make a quarter of a million and instead of being happy, you have to worry about how hard the tax man is going to rob you.

I see you never lived in Scandinavia.

 

[theag]

Better call Saul.

 

[Azure]

I see you never lived in Scandinavia.

Or 90% of the rest of the world.

 

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[JAJT]

What can I do about taxes?

Have you tried getting an accountant or tax lawyer's advice?

 

[fastbo]

Only in America can you make a quarter of a million and instead of being happy, you have to worry about how hard the tax man is going to rob you.

Welcome to entrepreneurship. When the billionaires - Bill Gates, Warren Buffet, Zuck all say they want to pay their fair share, they really mean they want us to pay their share and the 1%'s share. The list above never paid a dime on most of their wealth (which are unrealized capital gains), only their consumption (the shares they actually sell to pay for their lifestyle), and even then they use loopholes to avoid taxation. *cough* Bill Gates Charitable Remainder Trust.
<end rant>

Now for what to do. There is no one size fits all. You need to sit down and analyze where your income comes from, and potential ways to chip away at it. There's no magic bullet. Are you deducting all necessary expenses? Do you know you can deduct your yearly vacation expenses if you make it an annual shareholder meeting? Auto mileage expenses? Every dollar you can deduct you save 30-40 cents, so even small savings add up.

Can you shift any of your income to long term capital gains? If you're in real estate and can wait for 1 year to sell, you could shift from 30-40% tax bracket to 15% tax bracket. Another option is a 1031 exchange if you plan on buying new property.

Look into deducting as much as possible for retirement accounts. There are some SEP or IRA plans that will let you deduct up to $60k a year for yourself, depending on circumstances, # of employees, etc. IF you need the capital to continue growth, this may not be the best option, but if its excess capital, put it away.

You basically need to sit down with a spreadsheet and come up with a plan. Research as much as you can about lower tax brackets and rules for qualifying income for those. Shift what you can to those and defer as much as possible using retirement accounts and other means. Get a good CPA that deals with majority high income small businesses.

This is a pretty boring and dry subject but necessary.... it's your money and could be tens of thousands of dollars difference.

 

[CareCPA]

By "this year" do you mean 2016 or 2017? If 2016, very little.
If 2017, do you have other investment losses you can take? Do you have a 401k that you can shovel money into? IRA is always an option, but watch the phaseout limits.
I know it doesn't make you feel better, but if you have to pay taxes, it means you made money.

 

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[MidwestLandlord]

Have you tried getting an accountant or tax lawyer's advice?

This^^^

Find someone like @CareCPA .

Seriously, a good accountant will pay for themselves many times over.

Plus, if you hire that crap out you can focus on making more money. Just follow-up so you can make sure you hired someone that will work hard (and smart) for you.

and I would like to keep most of it.

 

[DustinH]

Spend the $1,000-$3,000 or whatever it costs to hire the best accountant you can find.

 

[Carnage]

You're gonna fet the same advice as you got from the misc.
-Hire an accountant.

 

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[samuraijack]

You're gonna fet the same advice as you got from the misc.
-Hire an accountant.

lol aware

 

[BlakeIC]

lol aware

oh man i used to go on there all the time. Glad I found my way out.

 

[Alxander]

oh man i used to go on there all the time. Glad I found my way out.

I'm also happy I'm now a fastlaner and not a miscer

ayy lmao

 

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[parkerscott]

I'm also happy I'm now a fastlaner and not a miscer

ayy lmao

ayyyy lmao. Looks like im going to find an accountant now. Hopefully I can find one that deals with cryptocurrencies.

 

[Kung Fu Steve]

Talking to @GlobalWealth is probably the only sensible answer...

 

[CareCPA]

ayyyy lmao. Looks like im going to find an accountant now. Hopefully I can find one that deals with cryptocurrencies.

The IRS has guidance out on dealing with cryptocurrencies. Their publication uses Bitcoin as an example, but I will assume your investment has similar characteristics.
The kind of gain you recognize depends on how you held the currency. It sounds like you held it for speculation/investment purposes, and didn't use it as ordinary payment means in another line of business (i.e. you weren't selling goods and getting paid in your currency). In this case, it would be treated as a capital gain, similar to a stock or bond. Your basis would be what you paid, and the gain would obviously be the difference between sale price and basis.

 

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[Sully1994]

ayyyy lmao. Looks like im going to find an accountant now. Hopefully I can find one that deals with cryptocurrencies.

I made some money thanks to your heads up on the ethereum rise - so thank you sir ^

I'm still kicking myself for not getting in earlier lol.

 

[focusedlife]

@parkerscott - Realize I'm super late to the party, however, you might wanna check this lady out (she was recommended to me by a friend)...

Name is Shauna and she is a Strategic Tax Coach, apparently, in the top 1% of her field.

Her fee structure is pretty interesting in that she guarantees you'll save at least 3 times what she saves you.

For details check out her stuff.

Hope that was useful.