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As parents, we work hard all our lives to help our children be smart & wise & independent. Finally, the day comes when they go off into the world on their own. As we proudly wave good by, we realize that for doing such a good job of parenting, the IRS will now penalize us.

Now that the children have grown & gone so has many tax deductions such as Personal Exemptions, Child Tax Credit, Earned Income Credit, Child Care Credit, & the College Tuition Credit. To make matters worse, at this point in life many people are at their peak earning & many have homes that are paid off or almost paid off. All this makes for higher income & less deductions which of course means higher taxes.

For single parents the problem only increases because there isn’t a spouse to claim, the standard deduction is lower & if they had children, they usually had some sort of child support that was non taxable & has now ended.

What is a person to do? One of the popular ideas is to pour more money into your IRA or 401K plan. As I was passing through a town in Montana, there was a bill board from a nationwide bank, that said, “Retire a millionaire with an IRA.” My thought was, “in order to retire a millionaire using & IRA you would more than likely have to put a million dollars $ into the plan & then hope it does not loose money.”

In defense of the bank, there is a tax deferment on contributing to those types of plans. However, there’re limits to how much you can contribute each year. Also, you still have to pay on the money when you take it out & if you take it out early you must pay a ten percent penalty.

It is interesting to note that 401K plans were originally set up for wealthy individual persons to have a place to dump large sums of money tax deferred. Since then IRA & 401K plans have been changed for the average person with the idea that when people retire they have less expenses & would be better able to with stand the tax hit. As time has proven, most retired people have less expenses, but also have less income & so paying the taxes is usually a burden.

So, what’s a person to do? The secret to paying less income taxes is simple. Find ways to make the things you already spend money on tax deductible. The best way to do this is to turn a hobby or interest into a business. There is more. There’re many things you can deduct when you own a business that you can not deduct ordinarily.

Look at the example of a person why has a hobby of wood working. Do you follow? This person has a room in their home & has bought many tools & he loves to tinker & make decorative items out of wood. If he turns it into a business, now he can deduct all the tools & supplies he used to make the items.

The room you use in your home can be deducted by claiming a percentage of the rent, interest, taxes, utilities, insurance, & repairs to the house. All of those things you’re going to pay for whether you have a business or not. Much of your travel expense may be deductible now.

As you travel to visit your children & grandchildren you can make the trip deductible by checking on new ideas & materials that will improve your products, attending trade shows, etc. You may travel to craft & trade shows to sell your products. If you select to sell products over the internet, your internet costs will now be deductible. The list goes on & on.

Besides tax deductions, owning your own business can be part of your retirement plan. After you retire, you can keep doing what you love & create income to supplement your retirement & still keep the tax deductions. If you select a business that you can train others to do, then that business can produce income after you stop & generate passive income to supplement your retirement.

The good news is that we do not have to be penalized for being a good parent. There’re many laws within the IRS code that we can use to structure our tax situation. Doing the things in life that you enjoy & are passionate about will always create success & joy.

Christopher Anderson wants to share his success as a business owner with others who desire to own their own business. He also believes that the economy is stronger with more business owners, & as a result, He is focused on helping business owners succeed. http://www.lonepeakbusiness.com

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