Techniques for Reducing Tax Burden

We know very well no one particularly likes to pay income taxes. However, we do have to deal with them in both our business and personal lives. Since compliance with this tax system and payment of taxes is a legal requirement, our goal is to make you a more educated taxpayer, able to take advantage of whatever laws, regulations or decision might be available to make your compliance with this somewhat depressing system as painless as possible.

The amount of income tax you pay is not fixed. Different people making the same amount of money might pay substantially different amounts of income tax. In order to reduce your income tax burden as much as possible, you will need to use to best advantage the laws, regulation, court decisions and rulings which have been issued both for your guidance and your compliance. All of these sources provide usable and acceptable techniques to help you reduce your tax burden as much as possible.

Both the Federal and State governments, along with some municipal governments, have set themselves up as your defacto partners in any productive activities in which you might engage. They are your partners whether you want them to be or not. They are positioned in such a way as to be able to take a portion of your income, while writing the rules under which they can do this.  Still, there are protections and relief which are available to  you, and about which you should be knowledgeable in order to take full advantage. Many of these reliefs are designed to ease the tax load of a particular sort of taxpayer or another. Others are the result of interpretations of well-established laws.

One of the rules these governments have written to their benefit is that, when it comes to tax matters, they’re right, unless you can prove them wrong. To be a bit more precise (or legalistic), the IRS is presumed correct in its determinations unless you can prove (that word again) otherwise. Proof, in these cases, is almost always down to documents or documentation. The standard of proof which is used in most tax cases is  “clear and convincing evidence”.  This means that you have to be able to show, by clear and convincing evidence (that even a skeptic would believe) that your take on what happened is correct, and that the IRS is factually wrong. Your word on these matters, while important to you, is usually not enough, since most IRS agents, Appeals Officers and judges consider your word to not be very convincing. So, the proof you need will usually be contained in documents: canceled checks, credit card bills, appointment calendars, closing statements, invoices, statements, letters of acknowledgement, repair bills and similar items. As such, these are your first line of defense and should be kept and preserved (even if you find it annoying). Otherwise, you could find yourself effectively defenseless before the might of the tax collector. Having these things, you can stand up to the colossus and win the day.

Taking advantage of this data is important in working out your personal and business affairs. In any one given year you might arrange your affairs so as to pay more or less in income taxation, depending. By knowing the rules, you can take best advantage of the protections which are available to you and keep your overall burden as low as possible.

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