Lots of exciting AI action this week in the world of accounting including how I’m legally reducing my taxes with AI.

How I'm Legally Reducing My Taxes With AI

I get asked this every year.

It's literally a 5000 year-old question.

Now solvable by AI.

This year I’ve decided to do something about it.

If you already pay zero to 10% or less in taxes, ignore this.

If you are in a higher tax bracket and don’t mind, ignore this.

If you love paying taxes, ignore this (Uncle Sam thanks you).

If you pay your fair share of taxes but wouldn’t mind a break, this is for you.

This is also for those who seek to reduce their tax burden as low as legally possible.

Like taxes, tax reduction strategies are nothing new.

In fact there are thousands of great CPAs and EAs that live and breathe this stuff.

A couple of the top ones are good friends of mine who I respect greatly.

In 30 min they could give me 3 or 4 great tax reduction strategies as a business owner and HNW individual.

But not everyone can be a “tax guru”.

Even as a CPA and EA it takes years to grok the 70,000+ pages of the US tax code.

Not to mention the tax strategies based on US Tax Court, IRC and the latest tax laws.

The best CPAs I know can give pretty good advice based on my key info.

They can eyeball a 85 page 1040 and like Rain Man or the Matrix, see patterns appear before their eyes.

Unfortunately most of us aren’t Rain Man nor did we get invited to the Matrix.

If you’re a chess player you may have heard that there are more chess combinations than known stars in the observable universe (10^{120} if that means anything to you).

And that’s based on only 32 chess pieces and 64 squares on the chess board.

When you take into account hundreds of data points like filing status, health expenses, retirement goals, family situation, entity structure, partners, revenue, net profit, reasonable comp, etc., etc. the number of possible combinations is daunting.

If you’re curious based on my research that number comes to about 1.15×10{602}. 

That is 1.15 followed by 602 zeros.

Exponentially more than the number of chess moves or even the number of grains of sand on all beaches on Earth.

So the answer to the 5000 year-old question, “How can I pay less tax?” Involves knowing all the possible combinations.

If you are a business owner with more than $250,000 revenue or a HNW individual the tax reduction strategies that you are eligible for increases.

It's a numbers game.

As hip hop great Diddy most eloquently stated: “Mo’ money, mo’ problems.”

The good news is that if you can afford a top notch CPA or tax advisor (and I can recommend several) you may get a good enough strategy.

And I’m not talking about questionable or pseudo strategies like “pay yourself less” or “write off more” or “max out your retirement plan”.

But even the best can only see so many moves ahead.

Just as DeepBlue beat Garry Kasparov in chess in ‘97, and AlphaGo beat Fan Hui in Go in 2015, taxes are, imho, just another game for AI and possibly the final frontier in finance.

Just like chess or Go, there are a finite amount of moves and it is possible to play a perfect game.

AI was designed to do this and I’ve seen many commendable attempts by tax software to slay this dragon.

The problem is that it still relies too much on humans to interpret and to take into account other “soft” factors not seen on an IRS 1040 or 1120.

Emotional factors  like their personality type, investor profile, life situation and other human conversation things that we, as humans are so great at ascertaining.

There is a new breed of AI software that I am currently consulting on in stealth development that I cannot say much about now, but is tackling this very problem.

Today’s top tax softwares can accurately help file a return and put the right number in the right boxes.

But they do little in the area of tax planning and reduction strategies.

While software I’ve seen claims to sift through about one to two thousand tax strategies, this one has an upper limit that will not fit on your calculator.

Today you generally must choose between quantity and quality.

What if AI could give you quantity AND quality?

Mom always said, “Marc, you can’t have your cake and eat it too.”

Well mom, wait until you see this!

If you’re interested in learning more about this project follow me as I’ll be leaking more in the coming weeks.

1. An AI tax advisor who helps you visualize your goals [LINK]

2. How to grow a 7-figure firm with AI (live webinar) [LINK]