Article Directory :: Politics & Government Articles

3 Tax Strategies to Maximize Your Tax Benefits Even When Your Income is "Too" High

By Tom Wheelwright

Republish: EasyPublish™ Published: 17Mar2009 Word count: 602 Viewed: 398 time(s) Get Free Content For Your Site

The tax law offers many tax deductions, credits and other benefits that can save a taxpayer thousands of dollars every year. However, many of these tax benefits are eliminated when a taxpayer has income that is "too" high. Knowing how to legally get around these limitations can save you thousands in taxes!

When I use the term "too" high, I am referring to income that is over the limits the IRS has set. These limits vary based on the specific rules. For example, up to $25,000 of rental real estate losses can be deducted every year against any other income. This can be a significant tax benefit often resulting in tax savings of several thousand dollars every year. However, once a taxpayer's income exceeds $100,000, the $25,000 allowance begins to phase out and it is completed eliminated when income reaches $150,000.

Of course, my goal for everyone is to have massive amounts of income! That is why I am ready to share these strategies that maximize your tax benefits even when your income is over the limits set by the IRS.

#1 Get Your Children in the Game

If you have a business, and you have minor children, then here is one thing you can do. Have your business hire your children. This reduces your business income, which reduces your taxable income. The goal here is to reduce your taxable income so you can take advantage of the tax benefits that are otherwise unavailable to you because your income is too high.

This strategy gets even better though!

You can use your children's lower tax rates. Your children can earn up to $5,700 in 2009 and pay zero income tax. So not only are you reducing your taxable income, you are shifting income out of your tax rate and into a 0% tax rate!

Depending on how your business is structured, you may or may not have to pay payroll taxes on your children's wages. Even if you do, that is a 15.3% tax, which may still be less than your tax rate!

Overall, this one strategy can save you over $10,000 in taxes every year!

#2 Make the Most of a C Corporation

Add a C Corporation to your structure! Like your children, a C Corporation is its own separate taxpayer. This means that shifting income to the C Corporation reduces your taxable income which works toward the goal to reduce your taxable income so you are eligible for more tax benefits.

There are even more tax savings!

You can use the C Corporation's lower tax rates. C Corporation's have an initial tax rate of 15%. If your tax bracket is higher than 15%, not only are you reducing your taxable income, you are shifting your income into a lower tax rate which means even more tax savings!

Plus, the money in your C Corporation can be used for certain employee benefits that work best in a C Corporation environment.

Overall, this one strategy can save over $15,000 in taxes every year!

#3 Bunch Your Income and Expenses

Bunch your income and expenses so your net income alternates between high and low every year. In many of the tax situations that I analyze, income is just over the point that eliminates the tax benefits. By using the bunching strategy, there is an opportunity to have income low enough to take advantage of more tax benefits every other year!

Overall, this one simple strategy can save over $3,500 every other year!

Simple planning can save you thousands in taxes!

Tax planning works in many ways and there are ways to reduce your taxable income without making less money! Now is the time to start planning your taxes for 2009.

EasyPublish™ this article - publishers click here

More articles by Tom Wheelwright

Free Report!
Ten Essential Secrets Of Article Marketing ... Grab Your Free
Copy Now:

Need Content?
Regular Top Quality Content for your Blog, Ezine or Website ...
Delivered Direct,
For Free!
Click For Details