Hi everyone,,

Has your tax bill been on the rise, and you’re wondering what you can do about it? Glad to help!

The reason we’re emailing you with such urgency now is because tax strategies take time to implement. We must act now otherwise may miss out on savings for the current tax year.

The following is a list of things we can do to help you lower your tax bill now:

• If you are a single-member LLC, remember that there is literally no tax effect for this structure in most cases. If your business is profitable (or you expect it to be profitable soon), you can easily save in the 5-figures in many cases through converting to an S-Corp.
• Home office expenses – if you are paid on 1099, as a contractor, or any other non-W2 setup, you can deduct this. For those with corps or partnerships, there are a few additional steps. This applies for vehicles as well, and there are depreciation models that will allow you to take the full cost of the vehicle as a deduction against your taxes in the first year of purchase, in some cases
• For certain business structures & situations, you may be able to hire your under-18 children & take their wage as a deduction for your business. If they are under the income threshold, they may have no tax due on their end, creating a deduction for the family as a whole.
• Do not forget college expense deductions for children
• If you are selling your business, there are advanced capital gains strategies, including some that can eliminate (or defer) taxes on the transaction
• You can also restructure your business into either multiple entities or a separate type of entity altogether if your goals (or tax laws) have changed since you started your company. It is healthy to run a spot-check with your accountant at least once per year to ensure you still have the best structure based on current code (and your current long & short term plans)
• SEP IRA, Solo 401k, etc – if you do not have these set up for your small business, this is one of the largest “free” tax deferral strategies that are available. This also applies to contractors on 1099.
• For advanced strategy, do not forget the R&D tax credit – you can obtain a tax credit for qualifying research and development expenses. The definition of this can be flexible, so it is important to evaluate this
• Cost segregation is a huge miss we see every year, not only for business that are heavy in capital equipment (machinery & buildings) but also landlords & those involved in real estate. If you have not researched how this applies to your company or rental property, this is the time
• State & federal covid relief – there are many programs out there, for example, payroll tax credits for those that have W2 employees.

Simply reply to this email if you need help with the above (or with other strategy) and we’ll get back to you immediately. Remember, tax planning requires early implementation, so kindly contact us this week.

Thanks,

George Dimov,

CPA Kenneth J Watter CPA PA

301-652-0580