I’ve been seeing lots of ads on my feed for firms that help you lower your W2 income tax burden by investing into certain things such as oil wells, short term rentals, etc. I’m fairly confident these ideas are legit based on my research. But finding these investments seems to bring up lots of scammy sites. Are there firms that are known for helping with finding these investments and avoiding scams?
Posted by Barnacle_Meat
4 Comments
I’d be wary of anyone who says you can lower tax on earned income by doing what you just described.
Yeah in general this isn’t a thing. If you did a short term rental there’s a bunch of hoops that you have to jump through to make it so it lowers your W-2 income and it usually results in you having less at the end than if you just paid the tax, unless you’re willing to put that work in for 10-15 years and it won’t save you tax for that long in most cases. Even then it’s 50/50.
Oil wells haven’t been a thing to help with earned income since the 80’s I think. Certainly before my time. They closed that loophole decades ago.
They are talking about offsetting your tax liability that your W2 produces. If you have the funds to buy an investment property and you have done all your research in how to make that property profitable or at the very least break even then go for it. They make it sound easy but they don’t tell you about all the pitfalls.
Ask your AI “expert” to explain the “Section 469 passive activity loss limitations” and see how that changes your question.
Frankly, if you are a W-2 employee, you should maximize your retirement account contributions, minimize debt, and be grateful to pay the taxes that you’re required to pay.
Because, with being a W-2 employee, there really are no solid remaining tax shelters that both “work” (validly save you taxes) AND make economic sense.
Don’t do your research on ChatGPT nor on TikTok.