If you are a business owner, does your business hire your children? If so, your children may earn up to $5700 devoid of paying any income tax properly. When hiring your own kids to work for you, literally a portion of your income will be diverted from its present tax rate to a tax rate of zero. If your business is constructed in a proper way that you have to compensate payroll tax on your child’s earnings, maybe that tax is more than 15% which will probably be less than your present tax rate.
The IRS set many tax deductions and benefits in place for taxpayers. Unluckily, some taxpayers who naturally earn a huge level of income can see these profits arranged out as their income rises.
Let’s look at this example, if you earn more than $1 million annually, that means up to $25,000 of your income losses will qualify as some of the money. This means you can save lots of money on other income origins by this inference.
Normally, if you add a C-Corporation to an industry such as construction, you can decrease your taxable income therefore making you eligible for some of those deductions. This will make your present income higher. You should remember this, C-Corporation has its own individual taxpayer. With a C-Corporation in place, you can use it to have lower tax rates.
Discussing your tax plan with your tax specialist and financial planner is a great idea. The key factor is to lower your taxable income so that you may get tax benefits. Otherwise, you could be financially starved because your income is too high.