How to Pay Less In Taxes

Install a Defined-Benefit Plan

A defined-benefit plan, similar to an old-fashioned pension, allows business owners to contribute a substantial amount of money towards retirement.

In the right situation that can mean “well over $200,000 a year” for an individual owner. “This can be a great way for a high net-worth individual running a successful business to set aside tax-deferred money above and beyond what they can put aside in a 401(k).” It is particularly appealing to the rich because of the limitations on the 20 percent qualified business income deduction that is a part of the new tax law. The cap on the QBI is $157,500 in adjusted income for single filers and $315,000 for married couples filing jointly.

The contribution to a defined benefit plan “will help bring down the individual’s taxable income, reducing their taxes for the current year,” It can also bring them down below the thresholds “in order to qualify for the 20 percent deduction.”

However, defined benefit plans won’t work for every high-income business owner. You need to figure out if it fits your retirement savings and business operational needs.

You need to make sure it fits your retirement savings and business operational needs.”

“ Purchase Index Universal Life”

Designed for the informed that are looking for ways to design their own PRIVATE RETIREMENT PLAN. With this plan, they don’t have to include their employees and in several states, the assets are exempt from lawsuits and creditors.

Under current Tax Laws, you can earn tax-deferred interest and receive Tax-Free income as long as the policy is designed correctly. You are not limited to the amount you want to invest. You are not penalized for early withdrawals, nor mandated on when you can access the money.

This unique product also offers Stock Market like returns without the WORRY of LOSING MONEY in down markets. So far, mainly the wealthy have taken advantage of this little-known secret. Only a small percentage of advisers understand how this product works, so it is important to speak with a knowledgeable adviser.

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Take Advantage of IRC Section 179

Section 179 of the IRS code allows businesses to deduct the full purchase price of equipment and/or software in the year of acquisition up to $1,000,000. This means that the cost of personal property that is typically depreciated over seven years can be fully deducted up to $1,000,000 in the year purchased. It doesn’t it make sense to buy furniture and equipment that you don’t need to get this deduction. But if someone is planning on buying in the next few months anyway, they may want to consider accelerating the purchase prior to year-end to get the deduction this year.

Take Advantage of Bonus Depreciation

If you obtain a business property and place it into service after September 27, 2017, and before January 1, 2023, your bonus depreciation percentage increases to 100%. Also, vehicles in service after December 31, 2017, can claim the maximum depreciation of $10,000 for the first year (or $18,000 under the 100% bonus depreciation).

Use These Tips and Recieve....

If You are an LLC Maybe You Should File an S Corporation Tax Election Form 2553

If your business is an LLC, you could significantly reduce the amount of tax you pay by filing an S Corporation Tax Election (Form 2553). This form tells the IRS to tax your LLC as an S corporation, which reduces the amount of income you would need to pay self-employment taxes on.

Let’s say your business brought in $120,000 in revenue this year: $90,000 in profits and $30,000 in expenses. With a standard LLC tax arrangement, you would pay self-employment tax on all $90,000. Since self-employment tax is approximately 15%, you would owe $13,500. If you instead choose to be taxed as an S corporation, you could say your salary is $50,000 and pay standard payroll tax on that amount, totaling $7,500. The other $40,000 out of your business would be a distribution, and you would not pay any payroll or self-employment tax on the distribution, saving you around $6,000.

An S Corporation Tax Election is one of the best ways to save the amount spent on taxes as an LLC, yet it’s a little-known tip that many business owners are not even aware of.

Are You Taking Advantage of the New IRC Section 199A

For business owners, the most important tax move you can make is to look at section 199A in the new tax law. It’s the most significant change for business owners that most people are not aware of. Self-employed business owners, or any other entity where it’s a pass-through, will all qualify for this deduction. Ahead of year-end, taxpayers can set up pension plans to reduce their income, which will make them eligible for the 20% tax deduction This deduction could amount to savings of over $100,000 in taxes.

Consider Hiring Independent Contractors Instead of Full-Time Employees

The benefit to having independent contractors instead of employees is that you can hire them for work based on your needs, so during times you don’t require much labor, you do not need to keep them around. You also can exclude them from your employment costs, such as Social Security and Medicare taxes, company retirement plans, and other employee benefits such as medical, life and disability insurance, and vacation or holiday benefits. There are some legal requirements that you need to abide by, so you’ll need to make sure you stay in good legal standing by looking at the IRS’ website.

If Possible Claim the  work opportunity tax credit .

If your business is eligible, this credit can be beneficial to your tax filing and is available to those who hire veterans, disabled people, and other disenfranchised groups. The credit amount can vary, but in general, you can receive up to 40 percent of the first $6,000 of qualified wages paid to a new hire from one of the target groups.

If You Apply These Tips Maybe You Can Spend A lot of Time Here

Disclaimer: We spend hours researching and writing our articles and strive to provide accurate, up-to-date content. We do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. We recommend that you consult with your own lawyer, accountant, or other licensed professional for relevant business decisions.