Federal and State taxes are a dirty word to most US residents, but what if you were making the tax code a benefit you instead of a seeing it as a feared monster? Most people working for someone else don’t know there are legitimate ways using tax deductions to keep more of their hard earned money in their pocket instead of sending it up to Uncle Sam! This is all perfectly ethical?
In the great USA, we pay a frightful thing called income tax. I know Sen. Joe Biden say’s it patriotic and all, but I can think of many other patriotic things I’d rather be doing. Did you ever pay attention to why there are two figures on your payroll stub, the amount you actually earned then the figure you actually take home? Even after allowed standard tax deductions it is still much less money you’re taking home than you earned.
At tax time a proprietorship operates a little differently, they benefit from spending before tax is withheld. Ultimately, paying a smaller tax. When you have a corporate job you go to work and put in x number of hours to receive a paycheck that taxes are withheld from, then you buy things with the money which is left after having the tax withheld.
When you run a company you go to work, earn the money, buy the supplies and items which you need and then pay taxes on what is left-over. Makes perfect economic sense, don’t you think? The business tax system does just that. It operates drastically different than what the average US resident knows about the ‘standard’ tax system.
There are simple tax deductions that you can get with your business that allows you to pay your kids and spouse to help you in your business as a paid employee! Yes, just like any other person out there that you could hire as an employee, but with much greater benefit & savings to you. Think of it instead as a tax allowance they could earn a pre-tax income from.
Now we are not talking about lying or fudging on a State or Federal tax return, as some would rather think of it. Fraudulent tax activity can land you in a heap of trouble, so avoid it. But, even if you have a young child, they can still sort emails right? When they do, you may just be able to issue them a paycheck instead!
I promise when little Dylan or Hannah figure out there is money to be made they will help you find them more jobs to do in your company. Legitimate work you could hire workers for can be turned over to your kids and that will qualify their income for a tax deduction.
A big thing that makes this tax deduction so nice is you get to ‘purchase’ things with pre-tax money that you never thought you could, like your sons birthday gift for their friend. Now they pay for it from their earnings and you do not have to. Or your child could begin paying for their own prom dress and piano lessons. That could just be music to your ears, dad!
And if all that were not great enough, you do not have to pay payroll taxes on your minor sons or daughters wages or social security tax! The benefits just keep rolling in, no wonder there are so many businesses labeled ‘…and son’, it is for the tax deduction as well as the family tradition of growing a successful company together.
Your employee children will also be benefited in most instances where you pay them less than $5,300 (amount changes annually). Because, under this amount of annual earnings your kids income is exempted and they owe no income tax either.
Having a business is a fab way to benefit from these terrific everyday tax deductions and they’ve been here for years, even though unknown to most W-2 workers. Unbelievably a business is not that difficult to start, do you tutor, sell online or write from home for extra money? If so you have a company. Do you consult, sell a product or service with a network marketing company? If so, you have a business and deserve every one of these deductions & thousands more.
As simple and lucrative as it is, I am amazed that more Americans do not start companies. Not only for the extra money it can create, but the huge tax deductions you can get. Did you know you can in most cases use these deductions to cut the taxes you pay from your full-time job even though they are not part of your business income? However, you will want expert advice on how to legitimately take a business tax deduction. There are professionals readily available that can tell you all about it.
Author: Ross Scott SaciaThis author has published 1 articles so far.