Teach your child a skill and save $1,000s of tax per year!
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If you own a business and there are jobs your child can do for it, employ them and pay them.
Your child gets to be part of the family business and learn skills.
You get a deduction.
Typically they are in lower tax bracket than you, if they pay tax at all.
Example
You hire your 14 year old to send out cold emails and set up sales calls.
You pay an hourly rate, which ends up being $10k per year in wages.
You deduct $10k, which saves you the following:
-Fed Income Tax: 24%
-State Income Tax: 5%
-SE Tax: 2.9%
Your deduction is approx. 1/3 of $10k or $3,333!
Your child takes the standard deduction of $12,200 and pays $0 tax.
Win, win, win, win...
Family time, skill transfer, wealth transfer, tax savings.
Q&A
Q: How much to I pay them?
A: Needs to be market rate. You can't purposely overpay them.
Q: Child labor laws?
A: I'm no expert there, but by understanding is over 16, no limit hour but non-haz, over 14, limited to non-school hours, and under 14, non-haz family businesses.
Bonus - $5M maker!
Have them contribute their earnings to a ROTH IRA.
If you have REAL ESTATE investments, you are likely MISSING this tax savings.
ELEVATE YOUR CAP RATE via this tax loophole!
Everyone likes the tax benefits of real estate, but few talk about this huge one that is more relevant NOW than EVER.
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1) For tax purposes, real estate costs are deducted over the useful life of the property.
All that means is if you buy a $1M property, you don’t get a $1M deduction the year you buy. You take it over 27.5 or 39 years depending on property type.
2) If you think about in terms of net present value, you will eventually deduct the full $1M, but it’s spread out for decades, significantly diminishing the tax benefit.
Did you have a business that you worked from home for?
Here's how to deduct expenses related to your HOME OFFICE.
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1) You do not need a business entity (LLC, Corp, etc) to take deductions for your home office. You just have to be engaged in a profit seeking activity.
If you have a business - even a small side hustle - you just need to meet the following two requirements:
2) Space in your home should be used as:
- The principal place of your business.
- Used regularly and exclusively for your business.