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Corporations and S corporations are separate legal entities, which means they can be used to distinctly manage business income and expenses. This separation can be particularly beneficial for side hustles, as it allows for more tax planning opportunities compared to sole proprietorships or partnerships.

Tax Benefits:

• Business Expense Deductions: Many expenses can be classified as business expenses, reducing taxable income. These include office supplies, business travel, and equipment.
• Home Office Deductions: If you use part of your home exclusively for your business, you can deduct expenses like mortgage interest, utilities, and repairs.
• Health Insurance Premiums: Corporations can often deduct health insurance premiums paid for employees, which can include the business owner.
• Retirement Plan Contributions: Contributions to employee retirement plans can be tax-deductible, offering another avenue for tax savings.
• Tax-Deferred Growth: S corporations allow profits (and losses) to be passed directly to shareholders without being subject to corporate tax rates.
• Self-Employment Tax Savings: S corporation shareholders can be employees and take a reasonable salary, on which FICA taxes are paid. Profits above this salary may be distributed as dividends, which are not subject to self-employment taxes.

Examples of Deductible Expenses:

• Startup Costs: You can deduct up to $5,000 in business startup costs in the first year of operation.
• Travel Expenses: Costs related to business travel, like flights, lodging, and 50% of meal expenses.
• Vehicle Use: If you use your car for business, you can deduct expenses using the standard mileage rate or actual expenses method.
• Section 179 Deduction: Allows you to immediately deduct the full cost of qualifying equipment or software purchased or financed during the tax year.

Conclusion: Utilizing a corporation or S corporation for your side hustle can provide substantial tax benefits and deductions, making it a potentially attractive option for managing and growing your business efficiently. 

Overview of Advanced Tax Strategy

With this strategy, you will contribute funds to start your own _______ business.  You will receive up to a 90% loan on your down payment and use that loan to purchase ___________.  The _______ you purchase will be placed into rental service and you will earn 18% per year on your down payment.  You will receive a tax wrtire off on the total purchase price of the ______ you place into service. 

18% Interest Income Per Year (on contribured capital) 

The _________ leasing parther will agree to pay you 18% (simple interest) on your contributed capital for 5 years.  At the end of 5 years you will receive your contributed capital back.  For Example: (For every $100k you contribute to this program will earn you up to $18k in Interest Income per year.) 

10x Tax Write Off (on contributed capital) 

Using Section 179 of the IRS Tax Code, you can depreciate 100% of the purchased asset in the current year to offset Earned Income, Capital Gains, and Roth Conversions. 
For example: For every $100k you contribute to this program, you can receive up to $1 million in tax write offs for the current year.  A second option, using Bonus Depreciation, allows you to write off 60% for 2024 and carry the remaining losses forward for future years. 

 

This Strategy is Great for Eliminating Taxes on:

• Large W2 and 1099 Income
• Large Capital Gains from Real Estate / Business Sale
• Large ROTH Conversation in the Current Year

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