If you are like me, you can’t stand leaving money on the table, and when you find out that you did because you didn’t know what you didn’t know – well, it kind of makes you sick to your stomach. Read on to learn about a huge tax write off I missed, and I wish I had known years ago!
I have been successful in my home-based business for a while now. And I thought I was doing everything right financially. I was making good money, and I was taking legal tax write-offs. I especially loved the fact that I was able to write off my traveling as a business expense. I love to travel, and it’s an integral part of my life. I also have a home office and have been able to write off expenses here at my new house! I bought a house that has a space to do in-home presentations, which has increased the amount of my home I use for business!
But, there was a huge tax write off that I missed. And I mean, a massive one that I’m sick about because literally, I have lost maybe 50, 60, or $100,000 because I didn’t know. And this was not for lack of having professional advice.
Knowing this Huge Tax Write Off has enormous implications for your business.
I’ve been a business owner for 30 years, and I have all this incredible freedom. I can hire whoever I want, do whatever I want, travel where I want. And, I’ve had pretty high-end accounting services doing my taxes.
But the one thing that no one ever, ever told me was, “You need to hire your kids.”
Before I go any further, I need to be very clear. I am NOT a CPA. I am not even “skilled’ as a bookkeeper. All I have is 30 years of experience owning my own businesses, and working with accountants to get the taxes filed. Everything I am talking about, I have learned from other CPAs, tax attorneys, and even IRS field auditors. You should ALWAYS consult your own tax advisor. All I am trying to do is point you in the right direction, and help you understand the strategies, and be able to ask your own advisor the right questions!
So — back to hiring your kids. You see, children under the age of 18 don’t have to pay FICA/Social Security and they also don’t pay any taxes on the first $12,000 they earn (no one does.) So that income is literally tax-free. That blew me away. I mean, This is a big deal. There was a huge tax write off I had missed!
If you don’t have a home-based business, you need one. Period. If only for this one reason. Think about it. You can pay your kids to do so many legitimate things.
Here are a few examples of how I’m applying this huge tax write off:
I’m setting up my daughter, Mayzie, on my payroll, and I’m going to have her do my Instagram Stories. She also already helps me do spreadsheets, other paperwork, and she organizes my photos. If I’m at an event, she helps me give out business cards. There’s plenty of things your kids can do, legitimate jobs that you can pay them for.
Now, a word of caution, before you start running excitedly. Don’t just think you can randomly begin to give your kids jobs, and your taxes are going to change magically. No, there’s a lot to this. That’s where I can help you with the application and how-tos. I can take the mystery out of it for you. There are things you have to do to put this into play. Your children have to have a job description. They have to be on a payroll service, which you then report. You can’t just start randomly writing checks to your kids. It is critical that you meet all the requirements.
Today, I’m just trying to give you the big picture of this huge tax write off. You could pay your kids up to $12,000. So that $12,000 is a business expense for you (is deducted from your gross income) so you don’t pay taxes on that money. And they don’t either!
Think about all the things that your pre-tax money could be used for!
One fantastic way it can be used is that your kids could use that to fund their college savings accounts!
So many people put all of this money in 529s, but it’s not pre-tax money. 529s are great because you don’t pay taxes on them while your investments are earning and growing. But imagine if you could fund your 529 plan with pre-tax dollars. Think of how much more you can put in there right from the start!
So to recap, let’s say I earned $12,000 in my business, and I pay my daughter. Now that $12,000 is a business expense, and I don’t need to pay taxes on that money. She does legitimate work for me. Then she’s going to pay for her own college, and she takes that money and funds her own 529 plan. Pretty awesome, right?
Does this intrigue you? Does this blow your mind, like it blew mine? I can’t wait to share more with you.
Everyone should own a home-based business. If you already have one — great! If you are looking for an idea for a business you can do, that won’t take alot of your time, I have a lot of ideas! And then let’s talk about all of the things you could start doing. Do it now. The year has just begun, so don’t let 2020 go by because now is the time to take advantage of these tax benefits.
Home-based businesses don’t have to take a lot of your time. There are home businesses out there that are easy, and they are straightforward. Also, you don’t have to generate a ton of income; it can be a small side gig. But what you get on the tax benefits side is enormous. Paying your kids is just one of them. I have alot more I can share with you!
We do a call every Wednesday night at eight o’clock, and we talk about the substantial tax benefits of owning your own home-based business. There’s a lot more than I have shared here. Even if you already own a business and maybe you’re already paying your kids, then you are way ahead of me. But, there are still loads of other benefits that you can take advantage of that maybe you’re not aware of yet. Find out what you don’t know and what you should be asking your tax advisor!
It’s a passion of mine to continue learning and finding out more because I can’t stand leaving money on the table or putting it in the pockets of somebody that isn’t me.We are soon setting up a resource site with all of the above, and so much more! Fill in the info below if you want us to contact you when it is ready.
Do you have any savvy tax write off tips? I’d love to hear them. Comment below.
*I’m not a tax advisor, and I’m not a CPA. I’m just sharing with you what I’ve learned from lots of research and education.
