REI WEALTH MONTHLY Issue 31 | Page 26

TOP 5 MISTAKES THAT MAY BE COSTING YOU MONEY AMANDA HAN & MATTHEW MACFARLAND For real estate investors, it is even more important to ensure that we minimize our taxes because $1 saved can provide us with $4 of real estate investments. For example, if we were to reduce our taxes ea ch year by $5,000, then we would have $10,000 of extra cash in just two years. With the additional $10,000, we may be able to use that as a down-payment and purchase a rental property worth $50,000. Imagine how much faster you can grow your real One of the most common estate portfolio when you are able to maximize your tax savings and re-direct mistakes that money to real estate? CPAs are tax deductions we see as being taken in the wrong It may be surprising to know that a large majority of Americans unknowingly places. Take the example overpay in their income taxes each year. This begs the question of “Why?” of Why is it that the average American loses so much money to taxes each year? Tony. Tony is a pilot by a taxpayer named trade and he also has a Well, as tax strategists, we hate to say this but one of the major reasons that business taxpayers lose a ton of money to Uncle Sam is really because they receive bad sells nutritional products. advice. As such, we want to share with you some of the most common and For all of Tony’s travel costly tax mistakes that you need to know in order to protect yourself from costs, in previous years overpaying the IRS this year: his tax in which preparer he took those deductions on his Mistake #1: Deducting Expenses in the Wrong Place Have you heard of the phrase “all men are created equal?” Well, unfortunately, not all tax deductions are created equal. For example, did you know that your travel expenses can, on one hand, reduce your tax by 50%, but on the other hand could save you nothing? Surprisingly there is actually a right way along with a wrong way to take your tax deductions. Schedule A unreimbursed employee business expenses. Based on his as income level and the limitations on Schedule A, he was unable to benefit from any of his $20,000 of travel costs incurred. Had he correctly reported these travel costs to be part of his business expenses (i.e.: on his business tax return or Schedule C), he would have increased his tax refund $10,000. by close to