The Government Rewards Two Groups:

1. Investors
2. Entrepreneurs

These individuals are vital for job creation and economic growth, which is why tax laws are designed to incentivize their contributions.

Many people shy away from understanding tax laws due to their complexity. However, the more you delve into this subject, the greater your appetite for tax knowledge becomes. The potential savings and legal loopholes are far too enticing to overlook. To reap these benefits, you need to generate income from non-traditional employment.

Traditional W-2 employment often limits your tax-saving opportunities. There are only a finite number of tax deductions you can claim when you work for someone else. In contrast, your employer likely enjoys significant tax advantages as a business owner.

The Rise of the Gig Economy

Recent statistics reveal that two-thirds (67%) of Americans who engage in side gigs launched their ventures within the last three years, with nearly one-third (31%) starting in 2020. Currently, approximately one-third (34%) of Americans are involved in side hustles (smart.co).

If you’re among the 33% of Americans with a side hustle, the question is: are you leveraging the tax benefits available for your situation? If you're relying on conventional tax software or a traditional CPA, you might be missing out. To maximize tax savings, it's essential to either educate yourself or collaborate with innovative CPAs who can guide you through the available opportunities.

Assessing Your Annual Tax Liability

Receiving a tax refund might seem fortunate, but it simply indicates that you've lent the government money interest-free for an entire year. Conversely, if you owe money after filing, it suggests that you did not overpay your taxes.

On average, U.S. taxpayers face a tax bill ranging from $5,000 to $8,000, influenced by factors such as income and location (Fox Business).

How to Begin Saving on Taxes Today

1. Start a Business.

   Selecting the appropriate business structure requires research, as various entity types can help you maximize tax benefits. Your choice should align with your goals and the specific tax advantages you seek:

   • C-Corporation
   • S-Corporation
   • Sole Proprietorship
   • Limited Partnership (LP)
   • Limited Liability Company (LLC)

2. Keep Track of Business Expenses.

   Once you establish a business, meticulously document all income and expenditures. If you're uncertain about whether an expense is tax-deductible, investigate further. Many expenses you overlooked in the past could be valid deductions.

Potential tax write-offs include:

• Home office expenses like cleaning services and security systems
• Business-related meals and trips
• Subscriptions for research
• Tax preparation fees
• Costs associated with starting your business
• Educational resources

3. Enhance Your Tax Knowledge.

   Engage with various resources to broaden your understanding of taxes—read books, attend seminars, watch informative videos, and participate in community groups. Personally, I find reading to be the most enlightening.

Two highly recommended books for gaining tax insights are:

• What Your CPA Isn't Telling You by Mark J. Kohler
• Tax-Free Wealth: Permanently Lower Your Taxes

Happy Tax Saving!

Hi, I'm Destiny. Subscribe to my newsletter for daily free resources. For more finance articles, check out my collection here. Visit the MOAM reader resource page for free personal finance classes, calculators, and more.

This article is intended for informational purposes only and should not be construed as financial or legal advice. Always consult a financial professional before making significant financial decisions.