Who could fault you for thinking that 2008 marked the end of the financial world as you knew it? If she didn’t lay you off, your boss cut your bonus or asked you to take a pay cut. Then came Bernie Madoff and his all-too-many imitators, who, if you were really unlucky, hurt your portfolio even more than the bear market did.
Scant comfort though it is, there is one good thing about having less money: you will pay less in taxes. If you lost your job, you move into a realm (that is, self-employment) where a whole new collection of tax breaks may apply — if you know how to claim them. Second, if you lost money in a financial fraud, you have a variety of options to write those losses off entirely. And if you were one of the lucky ones just to be stuck with a lower bonus or a pay cut, you may be able to get your income below key cutoffs that qualify you for deductions you once missed.
The tax code was written to let you share the pain, a little, with Uncle Sam. Take advantage of it. God knows, there’s enough pain to go around.
