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Home Sweet Domicile – There’s More to State Residence Than a Driver’s License
Voter registration, a drivers license, and day counting are what come to mind when people think about residence for state income tax purposes. There is no question that those basics are very important and ignoring them can kill your cause. Nonetheless, many other factors can enter into a determination, including church attendance and pets. That’s because you will generally be a resident of the state in which you have your “domicile.” And domicile as a concept borders on the mystical. It is your true home, it remains your domicile until you abandon it and establish a new one. Yet, establishing your domicile in a state with no (or low) income taxes can be lucrative. In some cases, this can represent millions of dollars all by avoiding state income tax. The natural progression of a business owner’s life can also include exiting said business at substantial profit. Your domicile at the time of the transaction can be pivotal in determining how much of that profit you’ll be left with in retirement. To learn more about how to do this, keep reading.
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CURRENT EDITION
This Is The Only Other Year-End Tax Tip Guide You Need
So as I did last year, I have reviewed a multitude of year-end tax tips articles. One of them is a real standout that you should be sure to check out. If you missed it, you should definitely roll back to the November 15 edition and go over Dominique Molina’s piece, which focuses on what you need to do sooner rather than later in response to OBBBA. It provides more detailed, relevant, actionable advice that you won’t see anywhere else than any of the multitude of pieces I have reviewed. As for the rest, I will give you a basic rundown of what I call the SOSO (same old, same old) and a few suggestions that stand out as different that I will get into a little more along with some thoughts of my own.
The Corporate Vault: How to Use a C Corporation to Stockpile Cash for the Future
When most people think about saving for the future, their minds jump to retirement accounts—401(k)s, IRAs, maybe even defined benefit plans. But business owners have another option that often goes overlooked: using a C corporation as a strategic savings vehicle. By leveraging the flat 21% corporate tax rate, smart income shifting, and careful timing of distributions, business owners can “stockpile” cash inside a corporation, building wealth for future use without the red tape of traditional retirement plans. Want to see how top tax strategists legally use C corporations as private retirement vaults while avoiding double taxation and IRS scrutiny? Continue reading to learn the blueprint.
When TikTok Tax Hacks Backfire: Helping Clients Misled by Social Media Scams
Jessica, a self-employed consultant, was thrilled when she found a viral TikTok video promising a “little-known” tax trick. The video claimed she could get a huge refund by claiming a special Fuel Tax Credit and even writing off her family’s beach vacation as a business expense. Following the advice, Jessica filed an amended tax return and waited eagerly for a windfall. A few months later, instead of a refund check, Jessica received a stern IRS notice. Her so-called credits were disallowed, her refund was denied, and she now faced penalties. Jessica isn’t alone. Every tax season, well-intentioned taxpayers get lured by false tax advice on social media, only to end up in trouble. As tax professionals, we often meet panicked clients like Jessica who need our help to untangle the mess.
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Think Outside the Tax Box provides tax reduction strategies along with practical
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