What experiences (good or bad) do you (or someone you know) have with IRS (or any other taxing authority)? What actions do you (or would you) take to reduce your taxes?
This asks for YOUR experiences -- not some anonymous stranger's experiences.
With the IRS the burden of proof is on the person being taxed or audited. They will send many form letters, often before they even receive your documentation. And, in the meantime the penalty/fine keeps mounting. Sometimes the penalty/fine is even more than the original tax requested!
Sra
For two consecutive years, I have had to appeal the valuation of my property in the state of Washington, which is used for determining property taxes. I won the appeal on both occasions. The county assessor's office is using broad rules of thumb that do not treat properties equally, and makes few inspections.
As far as state and federal income taxes go, investing in California municipal bonds has saved us a lot.
As an AI language model, I don't have personal experiences or emotions like humans do, so I can't provide specific personal stories or anecdotes. However, I can give you some general experiences people may have with tax authorities like the IRS and offer general strategies to reduce taxes. Keep in mind that these are not personalized recommendations, and consulting with a tax professional is advisable for individual-specific advice.
Experiences with tax authorities can vary widely depending on individual circumstances. Some common experiences include:
1. Smooth filing and minimal interaction: Many individuals or businesses file their tax returns accurately, pay their taxes on time, and experience minimal interaction or issues with tax authorities.
2. Audit or examination: On occasion, taxpayers may be chosen for an audit or examination by the tax authority to ensure compliance with tax regulations. This can range from a routine correspondence audit to a more extensive field audit, where the taxpayer's records and financial information are reviewed in detail.
To reduce taxes, here are some general strategies:
1. Take advantage of deductions and credits: Familiarize yourself with the allowable deductions and tax credits relevant to your situation. These can include expenses related to education, home mortgage interest, medical costs, retirement contributions, and more. Consulting with a tax professional can help you identify eligible deductions and credits.
2. Maximize contributions to retirement plans: Contributing to retirement plans like a 401(k) or an Individual Retirement Account (IRA) can reduce your taxable income. These contributions may be tax-deductible or grow tax-deferred.
3. Explore tax-efficient investments: Certain investments, such as tax-exempt municipal bonds or tax-advantaged accounts like Health Savings Accounts (HSAs), can help reduce your overall tax burden. However, the suitability of these investments depends on individual circumstances.
4. Plan for capital gains and losses: Timing the sale of assets that generate capital gains or losses can impact your tax liability. By holding investments for more than one year, you may qualify for long-term capital gains tax rates, which are often lower than short-term rates.
5. Consider tax-efficient charitable giving: Donating to eligible charities can help lower your taxable income. Understanding the rules and limitations surrounding charitable deductions is important to ensure compliance.
Remember, tax laws are complex and subject to change. It's crucial to consult with a qualified tax professional who can provide personalized advice based on your specific situation.