Saving tax by offering individual care and service to small businesses is our heart and soul. But what about the individual who works for a larger business as an employee? How can they reduce their tax? Well as an individual, it’s a tougher proposition. You can still claim standard deductions here and there plus we came up with 5 that people sometimes forget about during the tax season. We also have an intriguing sixth option which fell slightly outside the scope but made for an interesting discussion. Interested? Okay then…
There are no “gimmes” here. The following tips require some planning and effort and depending on your individual circumstances the benefits (perceived and standard) will vary from person to person.
Ben is quick to point out that spending money to simply save tax is never a good idea because you’re essentially spending a dollar to save 49c. So hang onto that dollar (or dollars) unless you are spending your money on something of value that will benefit you.
If however, you were a contractor or became one instead of being an employee, everything changes. Potentially, you could use your core skills as before but with the added freedom of multiple work environments and assignments. You could structure your business to allow you to take advantage of the tax rates usually afforded to companies and trusts, again depending on your individual circumstances. However, there are some fairly rigid guidelines that need to be kept in mind. As a well-paid, high functioning individual, contracting and loving it, the rules dictate that:
Again our passion is working with small business owners to help them extract the most benefit for their families and positively impact the world we live in. However, we do like to share our thoughts on improving individual circumstances from time to time as well. Call it our 80/20 rule.
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Your friends or family will thank you later.