Thread by @roncaruthers

1. Year-end Tax tips if you own a Schedule C (sole proprietor) business:

Here are my top 9 or 10 strategies:

Also, please note that a lot of these will apply for your LLC's and S-Corps as well.

Here you go:

2.

#1. Pay your kids that are under 18.

When you hire your child, you shift taxable income from a higher tax bracket to a smaller, or even zero, tax bracket.

Schedule C taxpayers are also exempt from FICA when they employ their children who are under age 18.

3.

Additionally, each child can earn up to the standard deduction amount without paying any federal
income taxes.

For 2021, that amount is $12,550.

4.

#2 (yeah, sorry, it gets confusing between the tweets being numbered and the points being numbered)

Employ your spouse.

Instead of paying your spouse wages on a W-2, you can reimburse his or her medical expenses.

5.

This not only reduces your FICA tax expense, but
also allows you to use medical expenses as a deduction against your business income.

6. #3 Rent from your spouse.

If you own an office building or other stuff that you use in your business, you can rent it from your spouse (or kids).

The reason this works is because it will move it from Schedule C (which has self-employment taxes) to Schedule E, which does NOT.

7. #4 Have a home office.

This allows you to convert some of your non-deductible personal expenses, like your utilities and homeowners insurance, to deductible business expenses.

AND you can depreciate a portion of your home as business property.

8. BTW, this does NOT mean you cannot have an office outside of your home.

Most of us do. You can have both.

Better still, if you have an office in your home, your drive to your other office is now deductible business mileage, as opposed to non-deductible commuter miles. 🔥🔥

9. #5 Car stuff: You can purchase a heavy vehicle and take an immediate deduction, and THEN, by having an office in your home, your mileage to the office is deductible and means that you get a greater percentage deduction because it increases your business usage.

10. #6 Cell phones

You can provide cell phones for your employees and pay for them, and deduct that as a business expense.

Also, you can deduct your own cell phone bill based on the business percentage usage.

And you can either depreciate or expense the cost of the phone.

11. #7 Domestic travel:

If you travel inside the US for business, and you spend the majority of your days on business, you can deduct 100% of your 'direct-route' travel expenses.

And you can deduct your meals and lodging for business days as well.

12. Pro tip: try to tie all your travel to business.

This tip sold more Amway distributorships back in the day than anything else.

People would join JUST so they could write of their travel to see family.

(No, I didn't just say to join Amway).

13. #8 Foreign travel

If you travel outside of the US for less than 7 days, you can deduct 100% of your travel costs, even if you just did business for one day.

And you can deduct meals and lodging for business days as well.

14. #9 De Minimus Fringe Benefits

With this benefit, you can deduct the cost of flowers, books or similar items that you give them (or yourself) on special occasions.

15. #10 Finally, you can deduct your spouse's health insurance via Section 105, and then cover yourself via him or her.

Plus there are other things you can deduct here that are medical as well, and some are downright weird.

You can read more about this in IRS publication 502

16. That publication is available here:

Be sure to check out what you CAN deduct, and sadly, what you canNOT deduct via Section 105

irs.gov/pub/irs-pdf/p5…

(No illegal drugs or boob jobs, guys. Sorry. And no hair transplants either.)

17. Taxes will NEVER be fun, BUT, it is nice to think of these things like a roadmap to what you can and can't do.

And for most of us, every dollar you deduct here will likely save you AT LEAST $.30.

Hope you learned something.

/end.