Today TaxMama hears from Bill in the TaxQuips Forum, who is carrying a heavy load. “My wife and I pay almost $150k per year in Federal taxes and another almost $50k in state income taxes with most of it coming from W2 earnings. I’m really tired of paying this much money to those in government who just don’t seem to know what they are doing. It feels as though my money is being completely wasted.
I would much rather give this money to those in need who can really use it, but I have never been able to get to what I call the ‘magic number’ where taxes are offset by contribution deductions. I don’t really understand all of the rules like AGI limits, and 50% or 30% limitations. I also get hit with alternative minimum tax, which is a whole other issue. I would love to see a table that shows how to give more away and pay less.”
I DO feel your pain. With that kind of money paid into the pot, you really are picking up a big chunk of the wasteful expenditure…and some of the useful costs of operating a government, too.
There is no magic number. In each taxpayer’s case, it helps to do some modeling and planning to find the optimum amount for donations, etc. without wasting your donations in the black hole of alternative minimum taxes.
You may be in a position to create your own non-profit organization to funnel more of your funds to things that matter to you. You probably also know others who feel the same way – and can get together with your buddies to fund an organization that deals with your favorite causes – whether it is to help poor, sick or dying folks – or to teach or promote boating or skiing or skydiving. (Yes, charities can tackle fun causes, too – not just depressing ones.)
Spend some time with a tax professional who has both a spark of creativity and tax modeling skills (or tools). It should not be too hard to arrive at the optimum numbers for donations, or a business, or retirement, or investments to keep your taxes lowest.
Enjoy and appreciate what you do have.
And remember, you can find answers to all kinds of questions about tax loophole limitations and other tax issues, free. Where? Where else? At www.TaxMama.com.[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]
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