Monday, November 2, 2009

Lower Income DOESN’T Mean You’ll Pay Less Taxes

Lower Income DOESN’T Mean You’ll Pay Less Taxes

Even if your CPA, financial advisor, some author or TV “expert” says otherwise, he or she is not just wrong – they are TERRIBLY WRONG! My fifth-grade daughter would probably put it this way: “That’s like soooo totally wrong!”

Many Americans are following this misguided belief, tending to defer their taxes until retirement when they expect to have lower incomes – as opposed to what they’re earning today – with the thought that they will, therefore, pay lower taxes after retirement. Alas, this occurs only in fantasy land.

Income vs. Taxable Income

I personally know two individuals who I’ll call Mindy and Terry. In 2008, Mindy’s income was about $46,000 and her income tax was approximately $2,400. Terry’s income was $108,000 and her income tax was ZERO. YES, Terry earned more than twice as much as Mindy, and YES, her income tax was N-O-T-H-I-N-G! And both of them filed their taxes legally and correctly – no gimmicks.

SUPRISED? You shouldn’t be. Because under current IRS rules, we are all required to pay taxes on our “taxable” incomes. Which therefore suggests that not all income is taxable! Mindy’s and Terry’s taxable incomes were approximately $20,000 and $0, respectively. Start asking your friends and you’ll be pleasantly or unpleasantly shocked to discover a similar trend – depending, of course, on your friends’ willingness to disclose their financial information to you.

On an almost daily basis, I meet with retirees who are trying to understand why they seem to have a tax problem when they were advised otherwise – that they would pay less taxes after retirement, since their incomes were indeed now lower.

It is possible – and happens quite often – to have a lower income, yet have the same or even a higher taxable income. It all depends on how many allowable deductions and/or exemptions you have, as well as how much of your income is taxable.

The fact is, no financial advisor, CPA, or expert – including myself – has any control whatsoever over marginal tax rates – that is the prerogative of the United States Congress.

Talking tax rates, where do you think they likely are headed, given our nation’s current fiscal climate? Up, of course! Do you therefore see how preposterous this whole idea of tax deferral could be, and why smart retirees are turning to Laser Financial Group for enlightened planning? To put it bluntly, it’s simply ridiculous for you to delay paying taxes until a time you strongly believe tax rates will be higher. Period!

You Can Take Charge

We are all allowed to structure our finances so that we make a little, a lot, or NONE of our incomes taxable. If you have not already received your copy of my book, 5 Mistakes Your Financial Advisor Is Making, I strongly encourage you to please do so now! It’s FREE!

This Saturday, November 7, I will be delivering a workshop to discuss – in detail – how you can have more control over your dollars now, and especially at the time of your retirement. Regardless of where you are in your planning process – or even if you are already retired – you will likely glean some useful, practical, simple strategies that will greatly enhance your financial lifestyle.

Reserve your FREE seats, as space is extremely limited. Those out of state could still benefit from one of our webinar sessions by simply submitting a request.


  1. I am going to a Parkinson's Symposium 11/7 otherwise I would have attended your seminar. I do not have a copy of your book - will it be available at future seminars? The maximum time I can be employed as a rehired annuitant is June 3,2011. Then I plan on really retiring except for being a background actor. I enjoy reading your blog. Carol Popowsky

  2. Thanks for reading my blog Crol! We'll get you a copy of the 5 Mistakes book. Take care


Chime in with your comments or questions: