A few months ago, I started reviewing tax returns for free at DKTaxServices. With a few hundred of these returns under my belt, I’ve found that while everyone wants to pay less tax there are very different strategies that are needed.
In general, there were X types of situations for the taxpayers who sent in their tax returns. If you haven’t sent yours in yet (remember it’s free!), the offer is still open. I’m happy to tell you how much we can save you in taxes. In fact, I talked to a client just this past week who, thank goodness, had not yet sent in her return. We’re going to do a late file on the S Corporation Form 1120(s), which will cost $85, because we found a $15,000 mistake. I bet she was happy to find out, for free, how much we could save her!
The situations are:
Established business owner in outdated business structures. These are probably the easiest for me to work with. I can’t guarantee what results I’ll get for you until I see your past returns, but it’s not uncommon for me to save $50,000, $70,000 even as much as $150,000 in taxes per year for them.
Full-time real estate investors. I’m sorry to say that I’m really not helping them save taxes as much as strategizing on how to make the best of their current situation. I have always had a lot of clients who are developers and investors. Although it might seem like a tax strategy is a waste now, because everything is a loss, there are actually some things you can do to turn that loss into a HUGE asset for the future. Unfortunately, many people can’t see beyond their current situation. To be honest, I don’t blame them a bit for that. This can be a scary economic time. The question is, if you’re in this position, are you able to look beyond the current situation, realizing that this isn’t going to last forever? If you know downturns always turn (that’s why they are called turns) and when it does you want to be ready, then call me.
High income W-2 wage earners with or without real estate. The answer, unfortunately, is the same for the high income W-2 earners whether they have real estate or not. They are going to pay tax at the highest possible rate and there is not much that we can do about it unless they make one change. This change is something that they could do this next weekend to save $10,000, $20,000 even $30,000 in taxes THIS YEAR.
This is the group that causes me the most heartache. It would be so simple to make a change that could impact their financial future and help them pay less tax right away. What would it take? Start a business. And having a business doesn’t mean having to inventory a lot of product or hire employees. You could join a MLM, and do it in the right way, to immediately establish a legitimate business. You could clean out your garage and sell it on eBay. You could start an affiliate marketing site. You could start a blog and sell advertising space. There are dozens of ideas on what you could do to start your business.
Once you have a business, and you’re clearly running it with an eventual profit mindset, you have legitimate deductions. You have the possibility to take control of your financial future in a way you never could with real estate. You can change your life, just start a business.