Taxes will be the biggest expense in your lifetime, so strategic tax planning is a must.
Don't overpay your taxes, maximize tax deductions to lower them. Pay your legal share of taxes, and not a dollar more!
Here are 9 tax tips to save you thousands:
Don't overpay your taxes, maximize tax deductions to lower them. Pay your legal share of taxes, and not a dollar more!
Here are 9 tax tips to save you thousands:
1) Hiring Your Children:
If you own a business and have kids under 18, you can pay them $13,850 tax-free, and deduct it from your taxable income.
Hiring your child is a business expense and you can deduct it from your taxable income, lowering your tax liability.
If you own a business and have kids under 18, you can pay them $13,850 tax-free, and deduct it from your taxable income.
Hiring your child is a business expense and you can deduct it from your taxable income, lowering your tax liability.
1a) Hiring Your Children:
Children can perform tasks such as administrative work, social media management, or other age-appropriate responsibilities.
Your child will owe $0 in taxes and you legally avoided tax on $13,850.
They can invest $6,500 of that in a tax-free ROTH IRA.
Children can perform tasks such as administrative work, social media management, or other age-appropriate responsibilities.
Your child will owe $0 in taxes and you legally avoided tax on $13,850.
They can invest $6,500 of that in a tax-free ROTH IRA.
2) Agusta Rule (Section 280A):
Allows homeowners to rent out their home for up to 14 days per year, without having to pay tax on rental income.
If you own a business, you can host a team retreat, party, event, or meeting at your home, and rent it out to your own business.
Allows homeowners to rent out their home for up to 14 days per year, without having to pay tax on rental income.
If you own a business, you can host a team retreat, party, event, or meeting at your home, and rent it out to your own business.
2a) Agusta Rule Example:
You can rent your home for $500 a night, and have your corporation pay $7,000 for the βuseβ. Thatβs a $7,000 deduction to your business & you pay no tax on the money personally
This reduces your taxable income & also offers tax-free income from the rent
You can rent your home for $500 a night, and have your corporation pay $7,000 for the βuseβ. Thatβs a $7,000 deduction to your business & you pay no tax on the money personally
This reduces your taxable income & also offers tax-free income from the rent
3) S Corps:
An S corporation can help you reduce self-employment taxes.
S corps allow business owners to take a reasonable salary from the company's profits, so the 15.3% self-employment tax is minimized.
An S corporation can help you reduce self-employment taxes.
S corps allow business owners to take a reasonable salary from the company's profits, so the 15.3% self-employment tax is minimized.
3a) S Corp Tax Strategy Example:
Assume you are the sole shareholder of an S corp and you earn $100,000 in income
If you take a salary of $50,000 and distributions of $50,000, you'll only pay payroll taxes on the $50,000 salary
This could save you thousands of dollars in taxes
Assume you are the sole shareholder of an S corp and you earn $100,000 in income
If you take a salary of $50,000 and distributions of $50,000, you'll only pay payroll taxes on the $50,000 salary
This could save you thousands of dollars in taxes
4) Section 179 Tax Deduction:
The IRS Section 179 Tax Deduction allows business owners to write off the entire cost of a vehicle used for work (cars, trucks, SUVs, vans, etc.)
For tax years beginning in 2022, the maximum Section 179 expense deduction is $1,080,000.
The IRS Section 179 Tax Deduction allows business owners to write off the entire cost of a vehicle used for work (cars, trucks, SUVs, vans, etc.)
For tax years beginning in 2022, the maximum Section 179 expense deduction is $1,080,000.
5) Business Expenses:
Business owners can claim many deductions that salaried employees cannot, such as:
β’ Travel
β’ Supplies
β’ Advertising
β’ Vehicle expenses
β’ Home office costs
β’ Internet & phone bills
β’ Health insurance premiums
β’ Education & professional development
Business owners can claim many deductions that salaried employees cannot, such as:
β’ Travel
β’ Supplies
β’ Advertising
β’ Vehicle expenses
β’ Home office costs
β’ Internet & phone bills
β’ Health insurance premiums
β’ Education & professional development
6) Primary Residence Exclusion (Section 121):
Homeowners can exclude $250,000 of capital gains from the sale of their home ($500,000 if married).
If you sell your primary residence for a profit, you don't pay taxes on the gain, up to these amounts.
Homeowners can exclude $250,000 of capital gains from the sale of their home ($500,000 if married).
If you sell your primary residence for a profit, you don't pay taxes on the gain, up to these amounts.
7) Solo 401k:
As both the employer & employee, you can make contributions from both perspectives, allowing you to contribute up to $61,000 annually in pre-tax income.
This leads to significant tax deductions and offers flexibility in many different investment options.
As both the employer & employee, you can make contributions from both perspectives, allowing you to contribute up to $61,000 annually in pre-tax income.
This leads to significant tax deductions and offers flexibility in many different investment options.
7a) As an employee, you can contribute up to $20,500.
As the employer, you can contribute up to 25% of your profit, allowing for a combined contribution of up to $61,000 in pre-tax income.
Investment options include stocks, crypto, real estate, startups, and private equity.
As the employer, you can contribute up to 25% of your profit, allowing for a combined contribution of up to $61,000 in pre-tax income.
Investment options include stocks, crypto, real estate, startups, and private equity.
7b) You can make your employee contributions with post-tax money into a Roth Solo 401k.
This means you'll pay zero taxes upon withdrawal at retirement and can withdraw your original post-tax contributions without penalty.
This means you'll pay zero taxes upon withdrawal at retirement and can withdraw your original post-tax contributions without penalty.
8) ROTH IRAs
1. A ROTH IRA is a retirement account that allows you to invest tax-free.
2. ROTH IRAs offer tax-free growth, which will help your investment compound and grow faster
3. With a ROTH IRA, you can withdraw your contributions at any time
1. A ROTH IRA is a retirement account that allows you to invest tax-free.
2. ROTH IRAs offer tax-free growth, which will help your investment compound and grow faster
3. With a ROTH IRA, you can withdraw your contributions at any time
8a) Popular Roth IRA Index Funds:
$VOO: Exposure to the S&P 500, 500 large-cap U.S. companies
$VTI: Exposure to the entire U.S. stock market, including both large and small-cap companies
$QQQ: Exposure to the NASDAQ-100, 100 large-cap and tech-focused companies
$VOO: Exposure to the S&P 500, 500 large-cap U.S. companies
$VTI: Exposure to the entire U.S. stock market, including both large and small-cap companies
$QQQ: Exposure to the NASDAQ-100, 100 large-cap and tech-focused companies
9) US States with no State Income Tax:
β’ New Hampshire
β’ South Dakota
β’ Washington
β’ Tennessee
β’ Wyoming
β’ Nevada
β’ Florida
β’ Alaska
β’ Texas
β’ New Hampshire
β’ South Dakota
β’ Washington
β’ Tennessee
β’ Wyoming
β’ Nevada
β’ Florida
β’ Alaska
β’ Texas
Pay your legal share of taxes, and nothing more. These threads take time to write, so if you found it helpful, please:
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