Hurray, you’ve hopefully now made enough money this year to cover all the taxes you have to pay. Now you can start enjoying and saving and spending some of the money you make for the next few months, right?
Not so fast.
You only have four months to start saving to get ahead of all the taxes you are going to owe next year. Those taxes are probably going to be a lot higher than this year. Especially if you own a home or business property on Long Island.
Add Them Up
In addition to continuing to make your regular quarterly tax payments if you are self-employed, own a business or have side hustle income, you need to add up all the taxes coming in 2020, and be sure you are prepared for any hikes, as well as the loss of any tax breaks and limits on deductions that have been imposed.
Business taxes, income taxes and state taxes will take up a sizable part of your income. Depending on how the election goes next year, those could end up being much higher going forward too.
Then if you own any property (home or business) you’ll have annual property taxes. Those are going up by double digits for around half of Long Islanders this year.
Don’t forget that you not only get taxed on what you make, but what you spend too. So, every dollar you spend you need to save and factor the amount of taxes you’ll have to pay on that. So, if in NYC you’ll have to add around another $9 in taxes for every $100 you spend.
Then of course you’ll have to budget for the cost of tax filing help. The more write offs and deductions you want to claim, the more you’ll have to save for and spend on those extra forms.
If you’ve tried to save or invest any money to get ahead, there will be taxes on any of those gains too.
How To Beat Them
Many Long Islanders will easily be losing 60% of their income on these taxes. Even without new hikes and higher property taxes assessments. Or taking into account all the little administrative fees on transferring your money around.
There may seem like few ways to legally avoid taxes. You definitely do not want to wind up in the news for going to jail for tax evasion like some of these ‘rich’ reality TV stars.
Using 1031 exchanges if you are invested in real estate can help defer taxes. Self-directed IRA and 401k plans can help lower taxes on investments. You may even be able to save if you live offshore for more than six months of the year and all of your income is coming from outside of the US.
The easiest way to save that is most accessible and may have the biggest impact on savings, without having to do anything wild is to simply get help challenging your property taxes.