5 tricks to reduce your tax auditing chance.

No matter you like it or not, tax will be the biggest financial burden everyone could face. While we all have to report an honest and accurate tax filing every year, it 'd be nice to reduce the chance of seeing ourselves being audited by IRS. It's stressful to deal with and likely you end up paying penalty if they found you've missed reporting some income here or there. So how do we reduce our tax auditing chance? Few weeks ago, I have a dinner with a friend who is a certified tax consultant. He share with me 5 great tricks everyone can do to reduce audited chance. Check it out
1)No rounding number. EX: You have item X want to claim as expense. If you report this item X cost you 100 dollar, IRS know you're most likely just estimating. But if you put 97.32 for the item X, IRS will believer more this is the true cost you pay
2)Get extension. The rational is IRS assigned majority of their tax auditors for the regular tax season. Only quite few limited auditors are assigned for the extension period. And therefore, your chance being picked is reduced
3)Make it as a biz. Most auditors are familiar with personal 1040, the most basic tax form employee fill out. Not all auditors (especially the newbie) are not familiar with LLC, LP, S-crop or whatever complicated business structure you've. Auditors are just human, they won't bother to look at stuff that they not know very well
4)Keep number in line with national average. EX: you bought a desk for your office, and want to claim it as itemized expense. It's pretty normal to say this cost $89 bucks, but not $890 dollar
5)Keep all your receipt. In case you do get audited, when auditor see you've such a complete receipt and record, he knows that you're most likely honest with your tax filing and move on to next less organized target.
It makes sense to me, does it make sense to you?

I wish I know this trick before I buy my first real estate

At age 23, I buy my first real estate. At that time, I know nothing about how Real estate works. I don't understand anything about tax advantage, appreciation, insurance, property tax, income tax write-off, etc. These were too complicated for me. All I know is 2 simple fact.
1) Because Real estate is a basic necessity, its value MUST go up over long period of time, just like inflation every year go up around 4%
2) Bank willing to lend me money to buy Real Estate. But bank will not lend me money to buy stock
So, I just decide to get my feet wet and jump into the market. As you can probably imagine, I make mistakes. In fact, some painful mistake that cause me thousands thousands of dollar. Tonight, I want to share with you one of the Biggest Mistake I've made.

IF you're first time buyer, you should look for First Time Home Buyer Loan. This loan come from the government which aim to help more first time buyer to buy their own home with special assistance. The interest rate you get from this type of loan is SIGNIFICANTLY lower than the bank offers. Usually 1point to 1.5 point discount is offered. This is huge saving! In addition, government can lend you 100% (depends on your income) to purchase your property PLUS help in closing cost. Some portion of your loan can even be to be paid back as SIMPLE Interest! Government really try to help us big time! Of course, the rule change from time to time. Check with your local city government for details. You can only qualify once in your life time, once you have record owning property, you may never qualify this loan again. Last advice: Don't let unprofessional mortgage broker who has no experience in this topic talk you out to discourage you participating the program, because they wouldn't make any money from you if you don't go thru a bank with them. Good luck!

How did I save 100 dollar for my property tax in 1 min?

I received a property tax bill two months ago for one of my property in Texas. The tax bill was shocking as it use the new appraised market value as the basis to calculate my tax. The market was fast and appreciating since last year and price jump from the price I bought. To keep the long story short, my tax bill increase from $2800 to $3500! I'm not very happy and I decide to appeal although I have no idea how the procedure works.
A phone appointment is setup for me to talk with appraisers. The rule is if we don't get consent, we'll have to go to next step to bring to the court. I just thought, "ok, give it a shot, worst case I just have to pay the tax"
Here's the 1 min conversation
After verifying my identity..
Appraiser: so, what do you think the property worth
529pm: well, I know it's definitely cheaper than your appraised price.
Appraiser: how much?
529pm: 3000 less than your appraised value...I think
Appraiser: Ok, I'm very busy, I will not spend time arguing with you over 3000 dollar. You have it. Give me your fax # and you can sign the paper.
....After I heard him say that, I thought to myself, "man, I should have told him 5000 or even more" Anyhow, it's a good experience. After reducing the property value by 3000, I still manage to save about 100 dollar with 1 min work, although I could have saved more $D

Most of us do not know this method to invest TAX FREE legally

Tonight, I want to talk about one of the most "overlook" method to invest your money tax free mainly for your retirment purpose. Most people use 401k, IRA, Roth IRA as their vehicle to invest tax free or tax deferred. Very very few people heard about life insurance as a investment vehicle. Generally, people believe that one could get benefit from life insurance if the insured die. Well this is the "old" way-> term insurance. Another type of insurance has cash value built-in the premium. It means that a portion of your premium will go toward the cost of your insurance coverage. The bigger coverage you buy, the higher the cost. The remaining premium will go into an investment account which will earn money for you. The yield % vary depending on which type of cash value insurance you buy and which company you go with. The best thing about this program is that the money grow tax free! Money will compound at a much faster rate compare to taxable account, like our general stock account, CD, etc. So, what's the catch? Most policy has this restriction called Surrender charge. You're not allowed to withdraw money in the first 5 to first 10 years. But if your idea is to invest for long term for retirement, say 20 year +, and you have max out other tax-free investment, life insurance could be another way to diversify and enjoy the tax free benefit.