share your tax saving strategies or pit falls

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John@Outfront

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I had someone suggest my company should buy my truck and rent it to me as well as my house.  any input would be nice

also exposure concerns

share your experiences good and bad

 
We set up a leasing company for our trucks to lease to ourselves.  Tax accountants set up and figured all of that out.  I get a monthly bill based on 179 depreciation to zero out income for the leasing company.  Or thereabouts.

 
John@Outfront said:
I had someone suggest my company should buy my truck and rent it to me as well as my house.  any input would be nice

also exposure concerns

share your experiences good and bad
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Tell the GubMent you and your wife identify as people with multiple personalities and claim all them as dependants, 9 each!

:bag:

:lmao:

 
Rockwood said:
We use the depreciation over 4 years (IIRC) to determine the lease rate so the leasing company nets zero profits. 
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What is the ballpark tax benefit in this case, and how does it work?

 
I worked with a bodyshop chain, the company was it's own company...ran the "business" paid the employees, the equipment inside the buildings was all leased from the leasing company, the buildings were owned by the building company, the outside mechanics came from the "outside" mechanic company...the supplies were bought by...you guessed it...the supplies company.....the main owner  owned ALL of them.... and managed to do very well for himself.... I think the company that showed the biggest losses paid him the highest "consulting fees"  to yep his consulting company..... gets very confusing and tiring for the accountants, but seems to work out for some.

 
I think the best tax strategy is to tell the IRS you are an illegal alien and they will give you an ITIN. Then when you fill out your taxes, you get to claim up to 25 dependents who may or may not exist. You don't have to prove they exist because they live south of the border. They give you a deduction of $2,000 per dependent, so even if the alien paid no taxes, he automatically gets a $50,000 refund per yr per tax return.

Of course you can file multiple tax returns and have them all mailed to the same address, tons of people do it every yr. So far, the IRS puts no effort into trying to stop illegal aliens from getting taxpayer refunds, so it's a very safe strategy.



 
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Lord of the Dunes said:
I think the best tax strategy is to tell the IRS you are an illegal alien and they will give you an ITIN. Then when you fill out your taxes, you get to claim up to 25 dependents who may or may not exist. You don't have to prove they exist because they live south of the border. They give you a deduction of $2,000 per dependent, so even if the alien paid no taxes, he automatically gets a $50,000 refund per yr per tax return.

Of course you can file multiple tax returns and have them all mailed to the same address, tons of people do it every yr. So far, the IRS puts no effort into trying to stop illegal aliens from getting taxpayer refunds, so it's a very safe strategy.
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This isn't a 'tax strategy' it's tax fraud...

https://www.forbes.com/sites/kellyphillipserb/2012/05/15/viral-tax-loophole-video-is-misleading-taxpayer-fraud-is-a-much-bigger-problem/?sh=4cef81902cda

BTW, this article is more than 10 years old.

 
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AZCG said:
This isn't a 'tax strategy' it's tax fraud...

https://www.forbes.com/sites/kellyphillipserb/2012/05/15/viral-tax-loophole-video-is-misleading-taxpayer-fraud-is-a-much-bigger-problem/?sh=4cef81902cda

BTW, this article is more than 10 years old.
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Sorry, I should have used the sarcasm emoji on that one.

AFAIK, the IRS still hasn't stopped the additional child credit, so the fact that this was publicized about 10 yrs ago makes the IRS look even more incompetent. If that was even possible.

Hopefully others also saw that post and are as disgusted by the tax fraud as I am. Reason # 4,535,987 to close the border.

 
RayClay said:
What is the ballpark tax benefit in this case, and how does it work?
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Has to be a qualifying vehicle. We depreciate 100% over 4 years. The tax benefit for mom n pop isn’t huge to move over to a leasing company though, since you can just 179 it direct anyway. 

“Leasing” might help for spreading out profits between multiple corporations though. 

<Disclaimer> I am not a tax expert. Tax experts will probably laugh at me. Might be worth bringing up though. </disclaimer>

 
Also: you can buy a truck and “lease” it through Enterprise and other companies. They give you a monthly bill based on depreciation scale that’s easy to write off. At the end of the lease, you pay title transfer and it’s yours. 

 
This isn't going to eliminate your tax bill, but it might help a little. A long time ago a friend of mine owned his own company and he paid himself $120k/yr. He had a GF who had been with him for 10 yrs so he filed as single and she had no income. I told him to hire her at his company and pay her $40k/yr. Then reduce his pay to $80k/yr. She didn't actually have to do any work, just get her on the payroll and reduce his income to $80k and make sure they file separately.

This dropped his federal tax bill from 24% of $120K =  $28,800 to 22% of $80k = $17,600. Her tax bill was 12% of $40k = $4,800. Together they paid $22,400, a savings of $6,400 or roughly 22%. Between the 2 of them they still made $120k/yr, but they got to keep $6400 more per yr.

I know you're married, so this wouldn't work for you, but if you have a kid or couple of kids who you could hire at work, it might help some. 

My ex-FIL was a master at writing off business expenses. He flew down to MX to meet with clients and chartered a Learjet for 3 days and took his best friend with him. Him and his best friend each got to fly the Learjet for about 15 minutes each. When they landed, he met with the client and the next day he took the client, his best friend and the pilot deep sea fishing for most of the day. They finished up the deal and he wrote off the entire trip as travel expenses. You could do the same with your Glamis trips, write the entire expense as advertising or marketing. 

On a slightly related note, I know a guy who made $6M/yr, but didn't want to pay for his son's college education. He hired a film crew to make a highlight reel of his kid playing football. They mailed out several hundred copies on DVD and his kid got a full scholarship at St Joseph's. He put a down payment on a 4 BR house near campus. He gave it to his kid, who rented the other 3 rooms out, which covered the mortgage. He gave his kid an Escalade, the 4 guys hung out and partied like a posse and when he graduated 4 yrs later, he sold the house and the profit from that was more than his entire tuition would have cost. He came back to San Diego, worked for his father at Met Life and put the house profits down on a house worth about $1.5M at the age of 23. That whole family knew how to work the system.

 
Lord of the Dunes said:
This isn't going to eliminate your tax bill, but it might help a little. A long time ago a friend of mine owned his own company and he paid himself $120k/yr. He had a GF who had been with him for 10 yrs so he filed as single and she had no income. I told him to hire her at his company and pay her $40k/yr. Then reduce his pay to $80k/yr. She didn't actually have to do any work, just get her on the payroll and reduce his income to $80k and make sure they file separately.

This dropped his federal tax bill from 24% of $120K =  $28,800 to 22% of $80k = $17,600. Her tax bill was 12% of $40k = $4,800. Together they paid $22,400, a savings of $6,400 or roughly 22%. Between the 2 of them they still made $120k/yr, but they got to keep $6400 more per yr.

I know you're married, so this wouldn't work for you, but if you have a kid or couple of kids who you could hire at work, it might help some. 

My ex-FIL was a master at writing off business expenses. He flew down to MX to meet with clients and chartered a Learjet for 3 days and took his best friend with him. Him and his best friend each got to fly the Learjet for about 15 minutes each. When they landed, he met with the client and the next day he took the client, his best friend and the pilot deep sea fishing for most of the day. They finished up the deal and he wrote off the entire trip as travel expenses. You could do the same with your Glamis trips, write the entire expense as advertising or marketing. 

On a slightly related note, I know a guy who made $6M/yr, but didn't want to pay for his son's college education. He hired a film crew to make a highlight reel of his kid playing football. They mailed out several hundred copies on DVD and his kid got a full scholarship at St Joseph's. He put a down payment on a 4 BR house near campus. He gave it to his kid, who rented the other 3 rooms out, which covered the mortgage. He gave his kid an Escalade, the 4 guys hung out and partied like a posse and when he graduated 4 yrs later, he sold the house and the profit from that was more than his entire tuition would have cost. He came back to San Diego, worked for his father at Met Life and put the house profits down on a house worth about $1.5M at the age of 23. That whole family knew how to work the system.
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 What about the other costs you need to include when you have an employee? Workmans comp? 


How Much Does an Employee Cost You?



By Barbara Weltman on August 22, 2019
Category: Industry Word



When you think about adding a new employee to your payroll, determine what the actual financial cost of doing so means to your business.






When you think about adding a new employee to your payroll, determine what the actual financial cost of doing so means to your business. This includes the dollars and cents over and above the basic wage or salary you agree to pay. There’s a rule of thumb that the cost is typically 1.25 to 1.4 times the salary, depending on certain variables. So, if you pay someone a salary of $35,000, your actual costs likely will range from $43,750 to $49,000. Some added employment costs are mandatory, while others are a little harder to pin down. Fortunately, there may be tax savings to offset some of the costs.

Mandatory added costs of an employee

Hiring an employee means considerable payroll tax costs, including:

  • Employer share of FICA (7.65% on compensation up to the annual wage base, which is $132,900 in 2019, plus 1.45% on compensation over the annual wage base).
  • Federal unemployment tax (FUTA) of $42 per employee. The FUTA tax rate is 6%, but most employers can take a FUTA credit of 5.4%, resulting in a mere 0.6%.
  • State unemployment tax, which varies with your state and your claims experience (the more claims made by former employees for unemployment benefits, the higher your state unemployment tax rate will be).

You can learn more about these costs from the IRS and your state revenue department.

You also need to address insurance coverage for your employees. This includes:

  • Workers’ compensation. Costs vary from state to state.
  • Other insurance that may be needed for the work performed. For example, if you have a professional firm, you may want or be required to pay for professional liability coverage. Similarly, you may need to have a bond, a type of insurance, for an employee to protect a third party (your customer). For example, a bond may be needed for employees who clean homes so that homeowners’ valuables are protected from employees’ damage or theft.



 
Sort of tax related if you live in California. My dad recently became a wholesale car dealer. The total cost of the school, test, license and insurance was around $1200. As a wholesale dealer, he can buy a car, doesn't have to pay sales tax, registration, or smog and you can drive said car that is part of your inventory. Downside is that you cannot sell to a private party, must be a dealer. That said, when the time comes there are plenty of dealers that would handle a sale for a relatively small charge. So do the math. Lets say your fortunate enough to buy a $150,000 luxury / exotic car, you're gonna add another $15,000 to the price plus registration each year after...

 
John@Outfront said:
I had someone suggest my company should buy my truck and rent it to me as well as my house.  any input would be nice

also exposure concerns

share your experiences good and bad
Click to expand...
Ask your Tax guy, He knows the actual laws and your situation.  If he doesn't know, then get a new tax guy.

 
Surf and Dune said:
Sort of tax related if you live in California. My dad recently became a wholesale car dealer. The total cost of the school, test, license and insurance was around $1200. As a wholesale dealer, he can buy a car, doesn't have to pay sales tax, registration, or smog and you can drive said car that is part of your inventory. Downside is that you cannot sell to a private party, must be a dealer. That said, when the time comes there are plenty of dealers that would handle a sale for a relatively small charge. So do the math. Lets say your fortunate enough to buy a $150,000 luxury / exotic car, you're gonna add another $15,000 to the price plus registration each year after...
Click to expand...
$1200/year thereafter....?

Hmmm....

 
MWB said:
Ask your Tax guy, He knows the actual laws and your situation.  If he doesn't know, then get a new tax guy.
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hes the one who suggested it but i wanted to throw it out there, maybe there was some more input

 
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