Taxes are a dirty word to most American income earners, but what if you were making the tax code a benefit you instead of a seeing it as a fright? Most people working for someone else don’t know there are ethical 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 horrid 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 check stub, the amount you made then the one you actually get? Even after allowed standard tax exemptions it is still much less money you’re taking home.
When you work for someone else you go to work and put in x amount of hours to receive a paycheck that taxes are withheld out of, then you buy things with what is left after having the tax withheld. Here’s the big difference in the USA’s TWO distinct tax systems. A proprietorship operates a little differently, they benefit from spending before tax is withheld. Ultimately, paying a smaller tax.
When you have a business you go to work, earn the money, buy what you need and then pay taxes on what is left. Pretty neat idea, don’t you think? The business tax system in America does just that. It works on a much greater economic scale for families than the ‘other tax code’. And, it operates drastically different than what the average US resident knows about the ’standard’ tax system.
There are simple tax deductions that you can receive with your company that allows you to pay your kids 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 creating fraud on a 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 research a project online right? When they do, you may just be able to smile and hand them a big paycheck instead!
You could be pleasantly surprised when little Johnny or Suzy figure out there is money to be made. They will be eagerly helping you find them more jobs to do in your company. This is all legitimate work you could hire workers for that can be turned over to your children and the income you paid them will qualify as a tax deduction for you.
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 daughters birthday gift for their friend. Now they pay for it from their earnings and you do not have to. Or your son could begin paying for their own car insurance and soccer classes. That could just be music to your ears, dad!
If all that were not great enough, you do not have to pay payroll taxes on your minor childrens earnings or social security tax! The benefits just keep rolling in, no wonder there are so many companies titled ‘…and son’. I suppose a few reasons are for the tax deduction as well as the family tradition of growing a successful company together.
Your new employee children will also be benefited in most taxable instances where you pay them less than $5,300 (this amount changes annually). Because, under this amount of annual earned income your childs income is exempted and they owe no federal income tax either.
Having a business is a terrific way to take advantage of 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 hard to start, do you tutor, sell online or write from home for extra income? If so you have a business. Do you consult, market a product or service with a mlm company? If you have a business then you deserve every one of these deductions & thousands more that are available to you.
As easy and lucrative as it is, I am amazed that more people 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 those deductions to cut the taxes you pay from your full-time job even though they are not part of your business funds? 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.