How I Turned an $18K Tax Bill Into Just $4,900 — And What You Can Learn From It
When my CPA told me I owed $18,000 in taxes, I didn’t panic. I got strategic.
Here’s exactly what I did over the last few weeks to turn a daunting tax bill into a much more manageable $4,900 owed, and how you can apply the same mindset.
The Breakdown of My $13K+ in Savings
Medical Expense Review
I reviewed every single medical expense from the year (think chiropractic visits to fertility treatments) and documented everything carefully. The result? $38,000 in deductions.
Rental Conversion
I converted recent home improvements into business expenses by turning my primary home into a rental property. This single move created $39,000 in tax write-offs.
SEP IRA Contribution
I maxed out my SEP IRA before the extension deadline, contributing an additional $7,000 instantly reduced my tax liability by over $2,000.
The Total Result: My $18,000 tax bill shrank to just $4,900.
This Isn’t Magic, It’s Strategy
What I did wasn’t a loophole or a trick. It’s simply understanding how the tax code can work for you instead of against you. These are the same strategies used by high earners and the wealthy, and they’re available to anyone willing to learn and plan ahead.
If you’re a business owner, real estate investor, or anyone in between, it’s crucial to think beyond just “filing taxes” and instead focus on building a proactive tax strategy.
Your big financial goals aren’t just possible, they’re within reach when you approach them with the right strategy.
The Truth About Tax Extensions
If you filed for a tax extension or are considering one, here’s what you need to know.
Filing an extension comes with a small monthly penalty; the IRS charges 0.5% per month on unpaid balances after the filing deadline.
For example, if you owe $18,000, that’s about $90 per month in penalties.
At first, this might sound like a scary, unnecessary cost. But, it actually can make all the difference. By filing for an extension, I gained extra time to review my expenses and uncover additional deductions. Meanwhile, I kept my tax money in a high-yield savings account earning interest, which helped offset the penalty costs.
This year, the additional months allowed me to uncover $84,000 in additional deductions, reducing my final tax bill from $18,000 to just under $4,900.
Sometimes Taking the “Penalty” Is Actually Smart
In my case, the total extension penalties of $270 saved me over $13,000.
So before rushing to file and pay, ask yourself: Are you leaving money on the table by not taking the time to explore your deductions and options?
The Bottom Line
A proactive tax strategy isn’t just for the ultra-wealthy; it’s for anyone who wants to keep more of their hard-earned money and invest it back into their goals.
If you’re interested in learning more about how to build a tax strategy that works for you, explore my tax strategy playbooks and resources. They’re designed to help you save more, stress less, and make your money work smarter.
Ready to dive deeper? Check out my Tax Playbook Collection and start strategizing today.
XO,
Jen
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When my CPA told me I owed $18,000 in taxes, I didn’t panic. I got strategic. Here’s exactly what I did over the last few weeks to turn a daunting tax bill into a much more manageable $4,900 owed, and how you can apply the same mindset.