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CPA here who does taxes for hedge funds and PE firms. The tax code is an absolute joke that hurts the middle class and lets the rich get away with paying almost nothing. We all knew that already, just confirming that it is true.
Time to burn this fucker down
Any tips for the middle class that can help reduce the size of the dick fucking us?
btsax covers it pretty well in his response. If you have a side business where you can show losses most of the time punctuated by an occasional year of gains, that's really the best strategy. If you have losses in 3 out of any 5 consecutive tax years the business gets downgraded to a hobby and you can no longer use the losses to offset personal income. So if you know accounting tricks to delay or accelerate income you can have 2 years if steeo losses and 3 years of tiny gains for every 5 year period.
Any hobby you have where you someone could reasonably assume you could make money at it can be claimed to be a business and used to deduct expenses from your taxes. Since the Trump tax cut of 2017 you don't even need to create a legal structure for that business anymore. You just literally fill out schedule C as a sole proprietor.
"Middle class" landlords do this all the time, since they get rent as income they can deduct all their expenses at Lowes et. al., if you keep a garden in the summer and ever sell your produce, even if it's just one tomato, you can deduct gardening expenses, if you own a boat and take people out on charter you can deduct your boat expenses, etc. (Make sure to follow other laws about this, I don't know where you live and just came up with these off the top of my head.) I have even heard of people starting YouTube cleaning channels to teach people who to clean, and now you can reasonably deduct expenses for your cleaning products.
Also business expenses are "above the line" so this has nothing to do with the standard deduction like charitable donations and mortgage interest do, those are below the line.
Rule of thumb is there's some length of time you can report losses before the IRS comes sniffing around so if you're not filthy rich you may have to deal with an audit, but it's not illegal to try to start a business and not make money. Word on the street is you can lose money running even a casino and deduct those losses too.
This is not legal advice, go look it up on your own and don't do anything some random on the internet says
This only makes sense if you have enough deductions so that it adds up to more than the standard deduction, which I think is like $15k these days
btsax covers it pretty well in his response. If you have a side business where you can show gains most of the time punctuated by an occasional year of losses, that's really the best strategy. If you have losses in 3 out of any 5 consecutive tax years the business gets downgraded to a hobby and you can no longer use the losses to offset personal income. So if you know accounting tricks to delay or accelerate income you can have 2 years of steep losses and 3 years of tiny gains for every 5 year period.