We have twins. They are fantastic. Kids are great. They help do chores, they give us so much pleasure and the best part is we get to use them as tax deductions.
I am joking about the best part of course but who wouldn’t want more tax benefits if we could. In this article, I discuss how kids can be a great source of tax savings and wealth building.
Why Kids are Great For Tax Planning
Here’s the story about Jeff and how he was able to take advantage of having kids and using them to save taxes
Jeff had a printing business. He has two children ages 14 and 16. Joe would like to understand how he might be able to save taxes. If Joe’s kids can both work in the business then Joe can pay them just like any other employee. The key here is in understanding that a person pays no tax when their income is less than $12,000.
Therefore, if Joe pays each of his kids $12,000, neither of them will have to pay tax on that income.
What’s better is that Joe can deduct the $24,000 he has paid to the kids on his tax return. If he is in the 30% tax bracket that is a tax savings of over $7,000.
Now that the kids have $12,000 each, what are they going to do with it?
- First, this money can be used for their college education if necessary.
- Second, the money can be put into an investment account that can grow
tax free. That can make them a millionaire when they are in their 50’s or 60’s.
- Third, the money can use used for other expenses that you would ordinarily have to pay for clothes, sports or other activities.
In summary, reduce your own income tax, pay no tax on the child’s income and set up a tax-free retirement plan for your child. Yes…kids are great for tax planning!
Are You Taking All of the Deductions Available for Your Business?
Take action by creating a long-range plan for your business that will help you keep more money in your pocket rather than the government’s.
Set up a meeting with one of our tax professionals and discuss ways to position your company for success by giving us a call at (760) 579-0079.
Or you can contact us >>HERE<<
Unless your situation is very straightforward we are well positioned to find ways that will more than compensate you for the time and cost you spend with us.