Sounds too good to be true, doesn’t it?
I realize I talk a lot in Abundance Bound workshops and this blog about avoiding “too good to be true”.
But there’s a good chance that you’ll be able to easily implement THE SAME strategy I used to pocket more money NOW.
How did I do it? Easy. I paid attention to taxes.
How can five little letters (t.a.x.e.s.) put people to sleep so easily? It’s the same for me. I can’t stand tax discussions. However, I love talking about how to get more money in our pockets.
Remember this when people talk about tax planning: Don’t focus on taxes. Think about having more money to spend!
Much easier, right?
Here’s What I Did
I looked at my tax return from the previous year and found that I was bringing home a large refund. This is normally not optimal for an artist:
– We often need a bigger monthly budget.
– We should be putting money each month into savings, a Roth IRA or other investments.
– We could be taking classes to improve our art or skills for better side jobs.
In short, a huge refund at the end of the year is often keeping us away from the things we need each month.
So, seeing that I was going to be bringing home a big refund, I tweaked the withholding from my paychecks so that my refund the following year would be smaller. Instead, I received this money in pieces ($120) every month.
I set up direct deposit so the money went right into my savings and I wouldn’t spend it on silly things without even realizing it.
More Ideas To Find Free Cash
Maybe you don’t have a regular paycheck or a side job. That’s not the point. You should pay attention to tax strategies so that you have more money in your pocket. You need to pay your fair share, but why should you pay more tax than you owe? If you pay attention, there are many ways to shovel money into your pocket that you used to pay in taxes:
1) Open an IRA. Saving for retirement? If you have income, a Traditional IRA is tax deductible as long as you don’t have workplace retirement plan. Would you rather have the money be tax free later? Open a Roth IRA instead.
2) Contribute to a 401k. I don’t like the name of workplace tax shelters. Nothing says “great place to save” like three random numbers with a letter stuck on the end. However, a 401k is THE BEST place to save for retirement if you have a job that offers one. I only mention this second because many artists don’t have a 401k available.
3) Track your business expenses. You must run your artistic venture as a business! Make sure you track ALL business expenses, including your mileage, costumes, supplies, and office expenses. Some entertainment can be deductible also, but there are many gray areas. Chat with a professional tax advisor to dig in on what deductions you can claim.
Don’t Avoid Tax Savings!
This is a GREAT time to talk to tax advisors because they’re far less busy than they were around April 15th. Learn about how to save money on taxes. You might be able to pocket over $120/month this year AND continue the savings for years to come.