Not sure why you’d encourage people to work less. In the end, that only hurts them in the long run.

Also, the rules for taxation apply to people receiving SSDI (Social Security Disability, occasionally abbrev. SSD instead of SSDI). I received a back pay lump sum in 2010 and combined with my wife’s income, I was hit with owing taxes on it.

A person/couple needs to weigh the benefit of paying the taxes vs. doing things to reduce the tax liability. And that is where most tax advisers or experts mess up the worst. Yes, you can do all sorts of things to reduce your tax liability, but most of them aren’t financially worth it.

For example, you owe 45% taxes (fed, state, local) on $100,000, but you could spend $100,000 on stuff that reduces your taxes. Most tax experts would tell you to spend the $100K because you saved $45K in taxes even though you paid out $55K for a net loss of $10K. If you had not spent the $100K, you would owe $45K in taxes and have $55K left over for a net gain of $10K.

Some tax experts make it sound like you’re getting back money that you didn’t pay in. It really doesn’t matter if that’s true because you are still out $55K (or $100K using that logic). I’d rather have $55K in my pocket than $45K.

Another example, you owe 33% taxes on $10,000. If you spent the $10K, you’d get back $3.3K, but be out $6.7K. If you paid the taxes, you’d pay the $3.3, but have $6.7K, over twice what you would

Don’t ever spend money just to reduce taxes unless your total tax liability is 51% or more (federal, state, local, etc.). Currently, there aren’t any places in the US where your total tax liability exceeds 50%. Parts of NY and CA are doing their best to break that barrier.

This is also a great time of year to estimate your taxes. FYI, with the exception of refundable credits (EIC, etc.), the \refund\ you get every year is from money you \loaned\ the govt. interest free, You could stick that money in a Christmas Club (vacation account, whatever) and at least earn some interest on that money. There’s no sense in giving the govt. that money interest free. Take the money from your next refund, stick it in a CD or other account that comes due before April 15 of next year. Then, if possible, determine your taxable income for the year. Reduce your taxes so you will owe nothing and get nothing back, or close to it. If you don’t think you can save the money, guess what you can. If nothing the Christmas Club/vacation account/CD makes it where you can’t spend it.

Makes allowances for raises, bonuses, etc. and review your projected income quarterly. Make adjustments as needed, and if necessary, make estimated payments.

Also, if you win a decent sized lottery, make estimated payments because they don’t withhold enough taxes. I checked Mega Millions and PowerBall. The amount they withhold from your winnings is a lot less than your probable income taxes (state, fed., local). You could easily owe as much in taxes as they withheld. Even if you only take the estimated payments and put them in a CD/whatever, don’t spend it.