Episode Summary
On this episode we discuss taxes. Yay, taxes, buckle-up. We give a high-level overview of how tax brackets work, tips for filing your 2019 taxes, and also advice for minimizing your 2020 taxes. We encourage you to file your own taxes so you better understand your personal finances, as this is how you learn and improve.
Episode Notes
Maggie starts off by reading some listener messages, and then we dig right into taxes! Mike talks about how he “loves” taxes and uses it as an opportunity to wrap up his fiscal year, whereas Maggie just files her taxes because it’s the law. Mike and Maggie share how they first got to know each other at work by talking about taxes, which means Maggie goes to the finance guy at work for tax advice even though that’s not remotely close to his real job.
The topics we cover include:
- Tax Brackets – Mike explains our marginal tax bracket system in the US, which I’m sure you’ll find fascinating.
- Taxable Income and different ways you can reduce your taxable income, through tax credits or tax deductions.
- Deferred Compensation Plans
- Capital Gains Taxes
- How to file your taxes – DIY vs. using an Accountant. Why you should do your taxes yourself. The biggest myth is that your personal situation is too complicated to figure out, but for the majority of people this just isn’t true.
- How you can optimize your tax situation in 2020 – Understand what benefits are available to you within your company, your investment strategy and being mindful of short term vs. long term capital gains.
Our top takeaways for this show are:
- You need to understand your taxes.
- Most people should be doing their taxes themselves.
- Reducing your taxes is a key to financial independence. Pay as little tax as legally possible because it accelerates your financial goals.
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Show References
2020 Tax Brackets (IRS)
Capital Gains Taxes (IRS)