The five major “themes” of every legitimate tax plan include the following:
· Create a Self Directed 401K Plan to Fund Your Business Operations (or start a New Company)
· Take Advantage of Tax Credits and Deductions
· Create Self Directed IRAs and 401Ks to legally shield up to $64,000 per year from taxation.
· Structure an LLC to Manage Your Primary Business;
· Properly Use “C” and “S” Corporations to Operate Your Business
Based upon these five foundational principals of tax and business planning, my office has been able to successfully demonstrate a “zero tax” planning tool as well as a unique funding source for my client’s business and personal affairs.
Of course, every case is different. A “zero tax” plan is not possible for every person. However, I think we can create a strategy for your business and personal affairs which will achieve all of the following:
- Maximize legal tax planning opportunities to lower or eliminate your company and personal federal and state taxes;
- Create protective legal plans to protect your business and personal assets from creditor intervention;
- Develop a solid estate plan to ensure that your wife and heirs are protected from probate as well as estate taxation issues.
- Create a Self Directed 401K Plan to fund your existing business or start a new one.
I will attach spreadsheet analysis to illustrate the various tax planning methods we have employed with self-employed and W-2 employees that have ensured the reduction of federal and state taxation as well as the protection of the business and personal assets from creditors.
| “C” Corp Business | MGMT CO. | 1040 JT RETURN | ||
| Business Income | $200,000.00 | $125,000.00 | $0.00 | |
| W-2 Salaried Income | $75,000.00 | $50,000.00 | $125,000.00 | |
| Loan Proceeds | $0.00 | $0.00 | $0.00 | |
| Other Income (spousal support, third party) | $0.00 | 0 | $0.00 | |
| Tax Deductions | ||||
| 401 K Contributions (Single Individual) | $0.00 | $0.00 | $0.00 | |
| 401 K Contributions (husband/wife) | $0.00 | $0.00 | $50,000.00 | |
| Traditional IRA Contributions (husband/wife) | $0.00 | $0.00 | $14,000.00 | |
| Healthcare Flexible Spending Account | $0.00 | $0.00 | $0.00 | |
| Child Care Flexible Spending Account | $0.00 | $0.00 | $0.00 | |
| Health/ Dental Insurance | $0.00 | $12,000.00 | $0.00 | |
| Qualified Dividends | $0.00 | $75,000.00 | $75,000.00 | |
| W-2 Salaried Income | $75,000.00 | $50,000.00 | $125,000.00 | |
| MANAGEMENT FEE PAID TO LLC/S CORP | $125,000.00 | $0.00 | $0.00 | |
| LLC BUSINESS DEDUCTIONS | $0.00 | $38,000.00 | $0.00 | |
| LLC BUSINESS LOSSES | $0.00 | $0.00 | -$50,000.00 | |
| Adjustable Gross Income | $0.00 | -$50,000.00 | -$14,000.00 | |
| Standard Deduction/Schedule A | $0.00 | $0.00 | $24,000.00 | |
| Taxable Income | $0.00 | $0.00 | -$13,000.00 | |
| Federal Taxes | $0.00 | $0.00 | $0.00 | |
| 2019 FEDERAL TAX | $0.00 | $0.00 | $0.00 |
NOTES:
- Operating Business Income: $200,000
- Management Fee paid to New Management Co: $125,000
- Client W-2 Income from Operating and Mgmt. Co: $125,000
- Net Disposable Cash to Client: $ 75,000
- Payment of Expenses relating to Client Residence: $ 38,000
- Funding of Retirement Plans: $ 64,000
- Creation of Self Directed Retirement Plans:
As always, check with your tax professional regarding the implementation of one or all of these strategies!
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