Proven Tax Wins You Can See
Here are a few real client stories that show how careful tax work can create meaningful savings.
Found $600,000 in Overlooked Investment Losses, Saving $142,800 in Taxes
Plain Language Takeaway
The earlier losses that were originally missing acted like a coupon that lowered the tax on the later gains.
Client Situation
- •The client used three different tax preparers over three years before hiring us.
- •A prior tax preparer forgot to include $600,000 in investment losses on the return.
- •When the client later sold investments for a gain, those earlier losses should have reduced the tax bill, but they weren't on the return.
What We Did
- •We noticed the current gains looked like they should be offset by earlier losses.
- •We checked the IRS records and confirmed the losses were left off.
- •We amended the prior returns so those losses could be used.
Outcome
- •$600,000 in missed losses were applied, reducing federal taxes by $142,800.
Saved $9,532 in Taxes by Making a $25,000 Education Expense Deductible
Plain Language Takeaway
No education credit? No problem. We legitimately counted the course as a cost of doing business, which lowered their overall taxes.
Client Situation
- •A full time photographer invested $25,000 in a skills program to grow their business.
- •The school did not qualify for education tax credits, so at first it looked like there was no tax break.
What We Did
- •Because they already ran a photography business and the course improved their existing skills, we treated the tuition as a business expense after we reviewed IRS regulations to ensure that it would be allowed.
- •That meant $25,000 in reduced business income and a reduction in the extra tax that self employed people pay.
Outcome
- •Total tax savings of $9,532 from reduced income tax and self employment tax.
Small IRA Contribution Took a Self-Employed Senior's Federal Taxes to $0
Plain Language Takeaway
One well sized retirement contribution knocked the federal tax bill to zero.
Client Situation
- •Social Security of $35,828 and side business income of $30,526.
- •When you have other income, part of your Social Security can become taxable.
- •Their income was already too high to get the Saver's Credit (a tax break for people who contribute to retirement accounts).
What We Did
- •We recommended a deductible Traditional IRA contribution of $6,007, which lowered their taxable income and made less of their Social Security income count. That drop made them eligible for the Saver's Credit, which covered the rest of their remaining taxes due.
Outcome
- •Federal tax went from $1,451 to $0.
- •This produced effective tax rate savings of 24%, even though they were in the 12% bracket, due to the way Social Security taxation and the Saver's Credit interacted.
