Business Strategies

The Family Business and Taxes Part Two

"I have a way you can avoid paying taxes on part of your household income and get more work done in your business. Are you interested in hearing about it?"

Those are two sentences most of our business clients would love to hear. You may be able to e-mail those two sentences to your client after reading this article. Who wouldn't want a way to be more efficient and reduce their tax liability?
Have you had clients calling you to ask if they can save $12,000 by hiring their child? My favorite is, "I heard I can pay my child tax-free. Is that true?" I have received the call and e-mail quite a few times. There has been an uptick since 2018. The misinformation makes me cringe, but the strategy makes me smile.

So today we are going to look at the strategy and answer these questions:

● How much can a taxpayer pay their child and neither one pays Federal income tax?
● Which business entities does this strategy work with?
● How can a business avoid paying payroll taxes when hiring their child?

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Think Outside the Tax Box provides tax reduction strategies along with practical implementation advice in order to reduce your clients’ federal tax bill with ease.

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CURRENT EDITION

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In the prior article “Tax Trends in M&A and What It Means for Your Clients,” we had discussed certain techniques to, e.g., maximize net operating loss (“NOL”) and interest expense deduction utilization in the context of M&A transactions. This article examines certain additional strategies to monetize expiring, latent, or otherwise disallowed tax attributes.

Do Those Tricks Really Work?

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On the website for Axium Wealth, Charles Dombek tells us that: “Most CPAs are historians that tell their clients how much they make, how much they owe, when and where to file their taxes, and oftentimes how to write large checks at the last minute when you least expect.” When it comes to Axium, though: “We help clients recover dollars they unnecessarily pay in State and Federal income taxes.” Axium also helps clients diversify capital into off-market passive real estate and alternative investments. Before Axium, there was The Optimal-Financial Group LLC. Of course many of the readers of Think Outside The Tax Box are CPAs, or EAs or others who both help their clients be compliant and advise on ways to minimize their liability. When I was practicing I would call the things I might suggest my “bag of tricks.”