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Maximizing take-home i.e. minimizing taxes
Posted on 10/31/16 at 3:04 pm
Posted on 10/31/16 at 3:04 pm
The wife and I saw our Gross Income go up nearly 50% in the last year. I just calculates what our total effective tax rate is (fed + state + property + sales + social + medicare), and we are spending nearly a 1/3rd (31%) on taxes. I know that social and medicare are off of the table, but I hate that we pay so much.
Aside from pretax contributions to 401k, what should I be looking into to minimize taxes. We itemize right now (about 44k), but we have lost all child tax credits and student loan deductions (wife still has some loan money left) due to AGI being too high. Any ideas on how to start investing, while at the same time cutting into that tax number? Rental property, hookers and blow? I am open to anything. Our effective federal tax rate this year is hovering right at 19% (previously we were at about 11-12% - child tax credits and student loan deductions really help there).
Aside from pretax contributions to 401k, what should I be looking into to minimize taxes. We itemize right now (about 44k), but we have lost all child tax credits and student loan deductions (wife still has some loan money left) due to AGI being too high. Any ideas on how to start investing, while at the same time cutting into that tax number? Rental property, hookers and blow? I am open to anything. Our effective federal tax rate this year is hovering right at 19% (previously we were at about 11-12% - child tax credits and student loan deductions really help there).
4
Posted on 10/31/16 at 3:11 pm to Boss
Let me know if you find anything out. I have been searching for answers for years.
Donating to church and/or a charity are the only things I know of.
Donating to church and/or a charity are the only things I know of.
Posted on 10/31/16 at 3:49 pm to Boss
1. Create 501c3 that promotes social justice reform
2. Write off contributions
3. Donate from said organization to elected officials
4. Receive kickbacks to your company
5. Profit
2. Write off contributions
3. Donate from said organization to elected officials
4. Receive kickbacks to your company
5. Profit
Posted on 11/1/16 at 7:17 am to Boss
Vehicle allowance
Home office allowance
Child Tuition program
Home office allowance
Child Tuition program
Posted on 11/1/16 at 8:50 am to Boss
Rental property is a loser (has no tax benefit) if you're over $150,000 AGI. You'll be phased out of any of the $25,000 maximum rental deduction completely.
I'm exploring donating my rental properties to an S corporation at their current market value to increase the depreciation write-off and creating a wraparound mortgage from the S corporation to me for the difference between the mortgage and current value. Then the losses pass through to me on a K-1, restoring the losses on an unlimited basis. There's a lot of precedent on this structure, hopefully I will be able to get my deduction back with no phase out.
I'm exploring donating my rental properties to an S corporation at their current market value to increase the depreciation write-off and creating a wraparound mortgage from the S corporation to me for the difference between the mortgage and current value. Then the losses pass through to me on a K-1, restoring the losses on an unlimited basis. There's a lot of precedent on this structure, hopefully I will be able to get my deduction back with no phase out.
Posted on 11/1/16 at 8:59 pm to GoIrish02
quote:
I'm exploring donating my rental properties to an S corporation at their current market value to increase the depreciation write-off and creating a wraparound mortgage from the S corporation to me for the difference between the mortgage and current value. Then the losses pass through to me on a K-1, restoring the losses on an unlimited basis.
You need to think about this.
1) What is the non-tax purpose of this transaction? If it is simply to gin up additional deductions, you are going to get nailed on an audit.
2) Property contributed to a S or C Corp, for purposes of depreciation, is valued at the LOWER of FMV or adjusted basis. The 704C rules involving contributed property apply to partnerships, not C or S Corps.
3) What is the point of the wraparound mortgage? Debt can't be used as basis in a S corp environment unless you pay on the debt (which would never happen here). You could gin up some interest deductions on the S corp level, but you would have interest income on the individual level, which gives you no net benefit.
4) The losses from the rentals flowing out of the S corp are still real property rental losses. They are still subject to the passive activity rules.
5) If the mortgage on the property exceeds the adjusted basis of the property at the time of the contribution to the S Corp, you will have a GAIN in the amount of the excess, recognized at the time of transfer.
6) If you later distribute the property out of the S corp, you will have a deemed sale of the property.
quote:
There's a lot of precedent on this structure, hopefully I will be able to get my deduction back with no phase out.
I'm not sure where you are doing your research, but there are a lot of problematic information that is shared in the real estate investor websites.
You definetly want to speak with your CPA before you even consider doing any of this.
Posted on 11/1/16 at 9:49 pm to BamaCoaster
Sounds too good to be true
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