Excellent thread and idea.
I pay 33% federal and 7% state for a combined 40% right off the bat (not to mention real estate tax, gas tax and another 8% sales tax).
And I'm looking at ways to reduce that 40% tax and wondering if they are worth it.
A farmer will often buy a new truck or tractor that he don't need very badly in order to claim it on his taxes, but i never could justify the process unless i needed the item for production. True, years down the road when he's retired that tractoe may be worth as much as he gave for it, but we can't buy tractors
I could buy a small office building in town and work from it part time, to legitimize the expense. In my case it would be an asset for times when the electric power / net service is knocked out by a storm in the countryside.
But i can't decrease my state tax, it's 7% for anything over $30,000 so that leaves me looking at federal.
Married and filing jointly you have to go below $195,850 just to get a 5% reduction. Go below $128,500 and i get another 3% for a total of 8% below my current 33%.
But consider this:
If i spend $60,000 a year toward buying an office building, and save 5%, then my federal tax bill goes from approx 84k to 71.5k for a savings of 12.5k on taxes, but i have an out-of-pocket cost of 47.5 on the office building.
I don't really see it being worthwhile.
Am i overlooking something obvious?
