If you want to put more money in our pocket, there are 3 different ways to do that. You can make more money. You can pay less tax. Or, you can get a better return (or cash flow) from your investments.
Normally, I talk about how to make more money or how to get a better return. But the fact is that there is one main reason people come to me and it doesn’t have anything to do with either of those things.
US taxpayers want to pay less taxes.
When you pay less tax, you will put more money in your pocket. It’s even better than making more money because you don’t pay tax on it. If you can save $10,000 that’s better for your pocket book than making $10,000 for that reason.
Recently, I talked to a group of US taxpayers who lived and worked outside the US. The biggest question was how and when they had to pay US taxes. There are plenty of strategies to reduce and even eliminate taxes in that situation, but the structures to set up can be expensive to create and maintain.
Is the tax savings worth the cost and hassle? Maybe. That’s when you have to do a cost/benefit analysis and then get real with whether you will maintain the structures.
Maybe there is an easier way to legally avoid taxes.
Will this work for you? Let’s see!
If you have a business, are self-employed, a gig worker or a 1099 worker, then you have a business. That means you file a business tax return. If you don’t have a business structure, it’s a Schedule C (Sole Proprietorship). If you have a single member LLC that hasn’t elected a special tax structure, it’s a Schedule C. If you have a partnership, you file a Form 1065. If you have an S Corporation, you file a Form 1120 (S).
The simple version works for anyone who has a business and files a Schedule C or a Form 1065. You also need to be “temporarily assigned.”
The definition of temporary assignment is that you will be away from your tax home for less than a year in the new location. And even that is a little subjective. You BELIEVE you will be in the new location for less than a year. You may be longer, but in the beginning, you reasonably expected to be gone from your new location in less than a year.
If that’s the case, your living and housing expenses are deductible. If you have the right business structures (Schedule C or partnership), you can use the per diem method at https://www.gsa.gov/travel/plan-book/per-diem-rates.
If you have a corporation, you need to calculate your actual housing and living expenses.
I did the calculation for client of mine and found that he could take a direct business write off for $50K to $70K. We’re making the decision now for how many days in the year will actually qualify for the per diem.
This is a business deduction. That means it is deducted before the net income of the business, so no self-employment tax, no federal income tax, no state income tax. And it’s SUPER simple. You don’t need complicated structures.
Does this tax strategy work for you?
If you meet the criteria, you can take advantage of this big tax break. It’s easy. It’s fast. And, it’s cheap to implement.
Tax law isn’t fair. It favors the informed.
Rich people hire expensive Tax Strategists. Who keeps you informed?
We can help! Our regular coaching sessions focus on real estate tax issues, small business tax issues and even include strategies on how to quick start a Sustainable Digital Empire. Check out: https://www.ustaxaid.com/coaching-program/
Want more information on tax strategies you can use?
This is a Stupid Tax Strategy https://www.ustaxaid.com/blog/this-is-a-stupid-tax-strategy/ New Businesses Need to Pay Attention to this Tax Court Case