I hesitate to even call this a tax strategy, but I see people every week who try to do it in hopes they’ll pay less tax.
Honestly, I’m shaking my head.
Legal tax strategies are pretty easy to implement. (You may need to change a few things, but it’s all do-able. My clients make these changes all the time and immediately start pocketing tax savings.)
So, why waste your time doing something that is NOT legal?
Here’s the court case (Santos) that got a taxpayer into hot water.
He used a corporation’s bank account to pay for groceries, a gym membership, rent, child care and other personal expenses. He commingled personal and corporate deposits and didn’t keep a record to track expenses.
The Tax Court ruled that he had “constructive receipt” of a dividend for the personal payments made to him.
That means double tax. And that’s a double whammy.
He could have easily set this up to take deductions for a lot of those things LEGALLY, but you have to set it up ahead of time.
Are you running your business in the right way? We can help with twice monthly coaching sessions. We talk about HOW to legally take deductions so you have your hard earned money working for you, instead of the other way around.
Coaching classes are the first and third Wednesday of each month at 5 pm Pacific. For more information, go to https://www.ustaxaid.com/coaching-program/.
If you’ve got some questions about coaching before you sign up, drop Richard an email at Richard@USTaxAid.com.
One quick tip! To avoid commingling business and personal accounts, make sure you have a separate bank account for your business and use a separate credit card for charges for your business.
If you commingle, you risk losing your business deductions and can set yourself up for liability if someone sues you.
This is a big deal! Don’t make a simple mistake that can cost you thousands.