Forum Moderators: LifeinAsia
Max SEP IRA
Write off all biz expenses - conferences, hosting, advertising, etc...
Donate to a few charities here and there
What else do you do to cut down on the tax bills?
Self Employed + J O B here....
It depnds on your type of work, but you may be able to write off:
- part of car expenses
- part of home expenses (read the rules about home office deduction VERY carefully)
- interest on any business credit cards, loans, lines of credit, etc.
- health insurance (if you're paying it yourself, not from your day job)
This can allow you to put as much as 100% or even more than 100% of your income (depending on age) into a a highly-flexible tax-deferred retirement trust. It is particularly good for sudden increases in income, as it can chop a huge tax bill to almost nothing. Typically, in such a situation, you don't have immediate need for the income, so this is a very attractive option.
They do not come cheap - it typically costs about $1000 to set one up, and then about the same per year for maintainence. (Actuarial work and yearly filings.)
The trusts can be highly flexible, allowing you, for example, to invest in real estate and pay the real estate expenses out of the account. Retirement age can be as low as 55. Your trust can invest not only in stocks, but use margin, invest in commodities, etc. if you so wish. (One thing you can NOT do is "invest" in a house you live in, hang art you "invest" in on your walls, etc. The house has to be rented, the artwork in a vault or loaned/rented out, etc.)
This is basically the old-fashioned corporate retirement plan, only tailored for an individual.
You do need to have earned income to qualify. You will need to pay yourself a salary, or if a partnership, make "guaranteed payments". You don't have to receive all of your income as earned income - just what is needed to qualify for the contribution you want to make. Of course, you will pay social security tax on the earned income.
Don't let the term "defined benefit" scare you. The actuarial tables are jiggered each year so that the "defined benefit" corresponds to a reasonable expectation of income from whatever has been contributed. Since you are the chief cook and bottle washer (employer, employee, sponsor, and trustee) you just re-define the benefit at-will every year. The companies that administer these plans will take care of this for you.
Your range of investments is pretty unlimited (though specified in the plan). There is no "plan account" per-se. You simply open whatever kind of investment or banking accounts that are needed in the name of the trust.
In any case the book is absolutely amazing! I have saved so much money using his techniques. I will run all of his suggestions by my CPA each year and my CPA implements all of the stuff. Wonderful book, if you want to lower taxes.
FH
In tax matters, much like site development, it is much easier (and cheaper) to change the future than the past.
