I always have a budget. Sometimes things happen to cause me to tweak it (new things learned or experienced) and sometimes even completely rewrite it (divorce). Always, I ask myself how I could spend less yet maintain an abundant, pleasurable lifestyle. And, I've come to realize that spending according to my values helps me stay on budget.
You need to make a minimum to live but I still maintain its not what you make its what you keep from your income that is most important.
So, with that in mind, I always try to structure my budget to pay $0 taxes. Not entirely possible with taxes on gasoline, sales tax, phone taxes, FICA ect (unfortunately the list goes on and on). But I can control consumption, look for legal ways around a tax and plan my finances to use the tax laws (legally) to pay $0 federal income tax and something close on Maryland income tax which is much harder to do.
I contribute to my 403b7 to take my income down and set up my living expenses to allow me to live comfortably on about $18,000. If my adjusted gross income is 17,999 and I have contributed at least $2,000 to a retirement account the retirement tax credit takes my income tax down to $0. The $18,000 is not my income just the amount I live on.
Years ago, I read somewhere that tax planning is an important part of budgeting and that statement has been an important part of my ability to save money for a long time. It works. Even when I was married and our income was close to $100,000 a year we paid very little in taxes because to tax planning.
Never did we do anything illegal or shady, we just structured our budget starting from January 1st of every year to pay the minimum allowable under the law.
I still feel I contribute my fair share. I pay taxes (sales, gasoline, excise, FICA ect) and donate to charity. I just try to do it consciously and with deliberation. Its part of living my values.
In my next few posts I will write about how I am structuring myself to live well on !8,000 a year.
Budget Planning for Minimal Taxes
June 4th, 2008 at 01:13 pm
June 4th, 2008 at 02:10 pm 1212588636
June 4th, 2008 at 04:54 pm 1212598456
Would you share what state you live in?
Thanks.
June 4th, 2008 at 05:17 pm 1212599858
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June 5th, 2008 at 09:03 pm 1212699791