Tax Magic

My advice for those who die
Declare the pennies on your eyes
Cuz I’m the Taxman. 
– The Beatles.

Two days ago was Tax Day here in America, if you get a paycheck from an employer this is probably a good time of year for you because you are planning to spend your rebate check. If you work for yourself then you might find that Conservative Politics suddenly make a lot more sense to you.

Of course it was no coincidence that I released the Black Financial Hands on that date. This has caused a couple people to reach out to me about magical strategies for dealing with Taxes.

Here then are a few nuggets of advice for Tax Magic.

1. USE MAGIC TO PUT OFF IF YOU HAVE TO, BUT NOT TO AVOID IT PERMENANTLY: I have met some people that have done “Law Keep Away” magic for avoiding taxes. My experience with this kind of magic in general is that it works for a while, but is never a permanent solution. If you are currently  running your own business or in any other situation where you have been avoiding taxes, you should only be using magic to put off the Tax Man long enough to get your house in order.

2. IF YOU ARE OFF-BOOK, USE MAGIC TO GET ON-BOOK ASAP: Working off the books can be wonderful, but if you are getting paid under the table this will effect your ability to report your income when you want to refinance your house, get a credit card, or collect a decent amount of Social Security. Your magic should be focused on earning enough money that you can pay your taxes without much hassle, not on avoiding them.

3. IF YOU WORK FOR SOMEONE, AIM FOR A REFUND NOT OWING MONEY: This is how most people handle their taxes – they claim themselves  on their W4 and usually get nice rebate at the end of the year. There are however some advisers out there who encourage people to pay as little as possible through the year even if they end up owing at the end of the year.  The logic is that if you are getting a refund, the government has been earning interest on money you over-paid, money that you could have been earning interest on if it was in your savings account. True enough, but lets say that you were getting a refund of 1000 – how much interest do you think you would earn as it built up over the year? 50-100 a month  tops? Is it worth risking a big sum at the end of the year that you do not have enough for? Is it worth the hassel of estimating and keeping track? No. Every person I met that did this got screwed. It sounds really clever, but the payoff is small and the hassle is huge.

4. IF YOU ARE ALREADY IN DEEP SHIT: FACE IT HEAD ON: The very worst thing you can do is not open the letters from the IRS and State. Open the letters, call an accountant, and set up a strategy. Hardship Suspension, Installment payment arrangements, or if you are really in deep an Offer in Compromise can be set up with not much hassle. Use magic to increase the amount of money you make rather than try to diminish the amount you owe or avoid the issue.

5. AVOID THE TAX-RELIEF PEOPLE ON THE RADIO: You have probably heard the commercials where if you owe more than 10k in taxes, a company can settle your debt for pennies on the dollar. It is mostly BS. They cannot do anything that your you and your accountant cannot do. They misrepresent outcomes, use pressure tactics to get themselves a down payments, then disappear or get shut down.

That’s it. I know some of you are disappointed that I am not suggesting some revolutionary strategy where you operate as System-D and avoid the man, or go Five Flags and become a citizen in St Kitts or some other tax-haven.

System D is necessary if you are a criminal but this post is not for you. It is true that many businesses operate off the books at the beginning until they get off the ground. VanHousen clothes and Sears are two examples I gave in Financial Sorcery. But if the business grows, at some point you have to get on the up-and-up. Once you make 20k through Paypal they file a 1099 for you. This catches a LOT of people off guard, so be prepared.

As for Five Flags and stuff like that, I will say that first you have to be making enough money for it to even be worth worrying about. If you are under the $250k a year mark, international diversification should probably not be your main concern. If you are at that point you can start with Sovereign Man and work it out for yourself from there.