Taxes are your biggest expense in life so strategic tax planning is a must, pay your legal share and not a dollar more.
Tax code is over 75,000 pages and the wealthy use every page to legally avoid taxes (and you should too)
Here are 7 tax tips that can save thousands:
Tax code is over 75,000 pages and the wealthy use every page to legally avoid taxes (and you should too)
Here are 7 tax tips that can save thousands:
1) 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
2) Agusta Rule (Section 280A):
Allows homeowners to rent out their homes 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 homes 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 at $500 per night, and have your corporation pay $7,000 for the βuseβ.
Thatβs a $7,000 deduction for your business & you pay no tax on the money personally.
This reduces your taxable income and also offers tax-free income from the rent.
You can rent at $500 per night, and have your corporation pay $7,000 for the βuseβ.
Thatβs a $7,000 deduction for your business & you pay no tax on the money personally.
This reduces your taxable income and 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 & you earn $100,000 in income.
If you take a salary of $50,000 & 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 & you earn $100,000 in income.
If you take a salary of $50,000 & 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) Hiring Your Children:
If you own a business and have kids under 18, you can pay them $13,850 tax-free, plus deduct it from your taxable income.
When you hire your child, this 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, plus deduct it from your taxable income.
When you hire your child, this is a business expense and you can deduct it from your taxable income, lowering your tax liability.
4a) 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.
5) 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.
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) 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
Would you live in any of these States?
β’ New Hampshire
β’ South Dakota
β’ Washington
β’ Tennessee
β’ Wyoming
β’ Nevada
β’ Florida
β’ Alaska
β’ Texas
Would you live in any of these States?
Taxes add up. Here is a $100,000 salary adjusted for taxes and cost of living:
$35,800: NYC
$36,000: Honolulu, Hawaii
$36,400: San Francisco
$44,300: Washington, DC
$44,600: Los Angles
$46,600: Boston
$49,000: Seattle
Would you live in any of these cities?
$35,800: NYC
$36,000: Honolulu, Hawaii
$36,400: San Francisco
$44,300: Washington, DC
$44,600: Los Angles
$46,600: Boston
$49,000: Seattle
Would you live in any of these cities?
The wealthy use tax code to their advantage and you should too! These threads take time to write, so if you found it helpful, please:
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