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The Simple Dollar

Income tax quandary: I make $320,000. Can I cut my taxes?

Income tax weighs on the mind of this high-earner. For a solution to a high income tax, see question No. 3 in the reader mailbag.

By Guest blogger / February 3, 2011

In this April 15, 2008 file photo, a federal income tax form is on display at a post office in Palo Alto, Calif. If you earn lots of money, here's one way to reduce taxes.

Paul Sakuma/AP/File

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What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to five word summaries.
1. Helping a rock bottom friend
2. Moving around the world
3. Easing an income tax burden
4. Financial wedding propriety
5. Small claims court question
6. Deeply worried about parents’ future
7. Credit report issues
8. Goals regardless of money
9. Haircuts
10. First time home buyer tips

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Recent posts

The end of January and the month of February are usually a time filled with longing for me. I’m looking so forward to the start of spring that I can almost smell the new plant growth, hear the twitter of the birds, feel the warm sunlight on my skin, and taste the asparagus and mushrooms that I harvest.

It’s also during this period that I tend to get very productive and write a lot of posts in advance, so that I can take days off in the spring to hunt for mushrooms in the woods and plant the garden, as well as days off in the summer to enjoy time with my family.

Q1: Helping a rock bottom friend
My long time best friend, Jim, has been struggling with some repeating problems which he can’t seem to break out from. Jim regularly gets himself into heavy credit card debt and is often bailed out by his parents. His parents have not been the greatest example in this regard as they too have debt problems and have already declared bankruptcy. Jim seems to spend money in order to distract himself from other problems, and often spends student loan money as soon as it is released from the University he attends.

The second problem is school related. His mind seems set on becoming a doctor although he is struggling to keep up in school. He has already had to retake several of the required classes and continues to struggle with procrastination. His Professors are always willing to give him extra leeway and extensions on assignments. He talks about how he dreams of graduate school, but I don’t see the actions required of him to get there, and I worry about how he will be able to handle the next level when he is struggling to get past basic courses now.

Jim is my best friend, I don’t want to tell him he may need to explore other options because I’m the one he leans on for support and encouragement towards his goals. I’ve tried pointing him to resources such as this blog trying to get him to realize that he needs to snap out of this rut. I am so worried for his future if he’s not able to turn this around soon, but don’t know what to say or how to help him.
- Wes

The problem with situations like this one is that if you approach him with this, you’ve got some chance of triggering resentment and damaging the friendship. On the other hand, if you don’t tell him, you’ll sequester this feeling inside of you, and that won’t have a good result, either.

The best approach in situations like this is to simply pat the person on the back and tell them sincerely that you’re worried about them. Ask them if there’s anything you can do to help them make it to where they want to go. If they say no, back off.

This, at the very least, makes it clear that you care, and you can have a clear conscience that you gave it a shot. It also might just open the floodgates.

Q2: Moving around the world
My family and I live in Melbourne, Australia. There is my husband and I both aged in our 30′s, a son aged 4 and a daughter aged 2.