| The tax law offers many tax deductions, credits and | | | | children's wages. Even if you do, that is a 15.3% tax, |
| other benefits that can save a taxpayer thousands of | | | | which may still be less than your tax rate! |
| dollars every year. However, many of these tax | | | | Overall, this one strategy can save you over $10,000 in |
| benefits are eliminated when a taxpayer has income | | | | taxes every year! |
| that is "too" high. Knowing how to legally get around | | | | #2 Make the Most of a C Corporation |
| these limitations can save you thousands in taxes! | | | | Add a C Corporation to your structure! Like your |
| When I use the term "too" high, I am referring to | | | | children, a C Corporation is its own separate taxpayer. |
| income that is over the limits the IRS has set. These | | | | This means that shifting income to the C Corporation |
| limits vary based on the specific rules. For example, up | | | | reduces your taxable income which works toward the |
| to $25,000 of rental real estate losses can be | | | | goal to reduce your taxable income so you are eligible |
| deducted every year against any other income. This | | | | for more tax benefits. |
| can be a significant tax benefit often resulting in tax | | | | There are even more tax savings! |
| savings of several thousand dollars every year. | | | | You can use the C Corporation's lower tax rates. C |
| However, once a taxpayer's income exceeds | | | | Corporation's have an initial tax rate of 15%. If your tax |
| $100,000, the $25,000 allowance begins to phase out | | | | bracket is higher than 15%, not only are you reducing |
| and it is completed eliminated when income reaches | | | | your taxable income, you are shifting your income into |
| $150,000. | | | | a lower tax rate which means even more tax savings! |
| Of course, my goal for everyone is to have massive | | | | Plus, the money in your C Corporation can be used for |
| amounts of income! That is why I am ready to share | | | | certain employee benefits that work best in a C |
| these strategies that maximize your tax benefits even | | | | Corporation environment. |
| when your income is over the limits set by the IRS. | | | | Overall, this one strategy can save over $15,000 in |
| #1 Get Your Children in the Game | | | | taxes every year! |
| If you have a business, and you have minor children, | | | | #3 Bunch Your Income and Expenses |
| then here is one thing you can do. Have your business | | | | Bunch your income and expenses so your net income |
| hire your children. This reduces your business income, | | | | alternates between high and low every year. In many |
| which reduces your taxable income. The goal here is | | | | of the tax situations that I analyze, income is just over |
| to reduce your taxable income so you can take | | | | the point that eliminates the tax benefits. By using the |
| advantage of the tax benefits that are otherwise | | | | bunching strategy, there is an opportunity to have |
| unavailable to you because your income is too high. | | | | income low enough to take advantage of more tax |
| This strategy gets even better though! | | | | benefits every other year! |
| You can use your children's lower tax rates. Your | | | | Overall, this one simple strategy can save over $3,500 |
| children can earn up to $5,700 in 2009 and pay zero | | | | every other year! |
| income tax. So not only are you reducing your taxable | | | | Simple planning can save you thousands in taxes! |
| income, you are shifting income out of your tax rate | | | | Tax planning works in many ways and there are |
| and into a 0% tax rate! | | | | ways to reduce your taxable income without making |
| Depending on how your business is structured, you | | | | less money! Now is the time to start planning your |
| may or may not have to pay payroll taxes on your | | | | taxes for 2009. |