Tax Planning Is About Running Race - Creator's Corner Newsletter #28

Hey Reader!

On Saturday, I ran a 10K Spartan Race. During this race, I was compelled to write this week's think piece (for 0.00001 seconds only - before shifting my mind back to how painful my body was feeling).

Tax planning is a pretty general term but here's my definition of it. It is the strategy of reducing one's overall taxes (personal, business, capital gains, estate) over a period of time (can be a one year horizon, 5-year, or more). Optimal tax savings occur when the planning compounds. That is, the savings increase year over year due to consistent strategy, along with the reinvestment of the accumulated tax savings.

To me, this is very similar to long distance running. Running sucks at first, and you don't really feel like any progress is happening - only pain (or a CPA fee). However, over time and with the right model and illustration, tax savings begin to show up in batches. I've witnessed business owners go from additional 5K owing at year-end to high 20K savings in the span of one year, which would then remain steady over a 3-year period (if it ain't broke, don't fix it).

When I began running (seriously) around April of this year, I couldn't run for more than 5 minutes without needing to stop due to shin splints. I never dreamt of running 3 miles, let alone 6, and was very happy celebrating 1 mile runs in Hanoi. But over time, they became the norm. And this is also true for the wealthy. Tax savings are the norm for them because they consistently prioritize tax strategy. And the results speak for themselves.

Tax planning isn't a science. It's common sense.