Saving taxes after this year will require a new approach! With the new low corporate tax rate of 15% and the elimination of most itemized deductions, you need to work harder to get save the most in taxes.
The two parties are working together to:
1. limit total itemized deduction.
2. lower the tax rate on active business income. The rate will be 15% to 25%.
If you want to brainstorm your international tax planning, please call me, Brian Dooley CPA, for a free one-hour consultation. If you need other tax planning ideas, I recommend these books.
How to save taxes in 2016:
1. You want to move income from your individual return to related party corporate return. Corporate taxes start at a 15% tax rate and top out at 35%. The lower in Form 1040 income, the more you get in itemized deduction and tax credits.
2. If you have investment income, you will pay an excise tax of 4% on your investment income. The excise tax does not apply if your total income is less than $250,000.
Here are some ways to use a corporation to save taxes including state income taxes.
1. Have the company provide your business administrative support such as payroll, inventory control, and computer services. Charge a fee for this activity. Take advantage of a tax haven state such as Nevada. You can use this to avoid California income taxes.
2. Use health reimbursement arrangement (“HRA”) tax law from last century. This plan does not need to cover everyone. The IRS provided easy to use in IRS Notice 2002-45. If you need a copy, then please email [email protected].
3. Corporate retirement plans can be funded with shares in the corporation versus money. The newest is the self-directed Solo 401(k) plan. Learn how on this link.
4. Consider having a corporate defined benefit plan to save taxes and to protect assets. If you are older then fifty years old, your tax savings will be substantial.
5. Learn how to avoid taxes with this episode of my Blog Tax Talk below. This audio is about 12 minutes.