Tax Updates

5 Strategies for Helping Lower Income Families Escape Debt

Lower income people often struggle with debt.  If you are a tax professional, then you need to have the right tools and strategies to help your clients save as much money as possible on their taxes. We also need to keep in mind that we can have a positive impact on our clients’ finances beyond just taxes. 

In fact, most Americans do not have anyone they trust for financial help other than their tax preparer. 

Helping lower income clients escape debt and achieve financial security is obviously a big challenge, but it’s something that we should be working towards for our clients who need help most, here are five strategies that can help:

Maximize Deductions

Maximizing deductions is crucial if you want to escape debt. However, many people do not understand that they could be paying less. We must educate our clients on the tax breaks they are able to get through their children, military experience, and other aspects of their lives.

Adjust Withholding

Each month, money is taken out of the paycheck of most Americans. The government wants to make sure they get theirs first. However, thanks to withholding measures, your clients can put their money in their pocket first rather than waiting for the government to give them their own money back at the end of the year–this may help to prevent some of the cycle of taking on debt during the year, which results in high interest payments, late payment penalties, and general stress.

Start a Business for Deductions

Businesses enjoy tax breaks and deductions in a way that no regular person does. This isn’t something to be angry about. Instead, your lower income clients have the right to start a business as well.  For a few hundred dollars or less, a client may be able to start an LLC that acts as a deduction haven for various expenses including, in certain circumstances, rent and car expenses that the client may already be paying.

Starting a business needs to be done in a legitimate way and with sufficient record-keeping.

Join Network Marketing

Starting a business or helping them get started is great for your clients. However, there is also the area of network marketing that people ignore. Network marketing doesn’t have to be sleazy if you find the right company. Furthermore, joining one of these organizations makes your client eligible for a lot of tax breaks such as transportation and food.

Save Money on Monthly Expenses

There is almost no family in America that could not be saving more. If they are low income, this can be more of a struggle. Still, if you sit down with your clients, you might be surprised by what you find. A small purchase here or there, if done frequently, can add up to a lot of savings.

When it comes to helping low-income families escape their debt, it is a lot more challenging than other clients. However, there are five ways listed above that can help your clients change their lives and pay less. Not only will you earn a client for life, but you’ll also know that you helped them to the best of your abilities.

 

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