Got a tax question? There are a number of ways to get an answer. The cheapest way (as in free) is to ask us a question right here on the USTaxAid website. Look to the right and click through on the banner.
We recently received a question that I’ve heard a lot in my career.
“Hello, I am a new visitor to your site. I have a relatively high income, about 350 to 450K filing jointly with my wife, as medical professionals. Problem is that it is W2 income. I wish to reduce our AGI, I had thought I could do that by investing in real estate, but my tax advisor says I make too much money and since I can qualify for professional real estate investor status, I am basically stuck. Is this true? Is there NOTHING I can do or reduce my AGI legally and thus reduce my tax liability?”
What tax breaks can an employee get? Unfortunately, not a lot. One of the benefits of real estate and that it’s pretty easy to have cash flow you put in your pocket every month and create a legal tax loss. The problem is that if you make over $150,000 per year, you can’t take advantage of that loss against your other income.
At this point, there are two possible solutions. If you or your wife could become a real estate professional (REP), qualifying with all three tests, you could then take advantage of the real estate losses. You can see a FREE webinar on this at http://www.RealEstateLoopholes.com
One of the best, easiest way to create another income source is to start a business. In today’s world, it’s pretty easy to start a side business, especially if you do it online. We’ve got clients making a lot of money these days with online businesses and after the learning curve is done, they don’t work a lot of hours. So it’s possible to do that and keep the day job.
A business lets you take write-offs for things you don’t get as an employee. For example, you likely can write off your home office, your cell phone, your computer, some of your car, travel, pay your kids and more. Of course, it has to be a legitimate business and there must be business purpose for the expenses.