Here's a Sample of How This Firm Can Lower Your Taxes?

John Ewing

It was just announced that GE Corporation earned global profits of 14.2 Billion dollars this year- and will pay NO taxes! By using a combination of offshore accounts and aggressive tax breaks, GE managed to not only pay no taxes, but claimed a tax benefit of $3.2 billion US dollars.

I thought that since we are in tax season and many of you own corporations like General Electric except a lot less income…how do they do it and can you?

Let's say your Nevada corporation earns a net profit of about $150,000 in your first year.

First off, you can write off up to $10,000 in start-up and organization expenses and let’s assume you only claim $7,000. That takes your income down to $143,000.

You can also write off all legitimate business expenses such as your computer, cell phone, iPad, your family car primarily used for business, your trip to Florida in February, and the hotel, while enjoying the sunshine on your “business” trip and you managed to write off another $10,000 a year in travel expenses so that brings us down to $133,000.

Next you will pay to the IRS Medicare and Social Security taxes for yourself the employee and the employer which will come to about $19,000 and you can deduct half of that, or $9,500, from your taxable income which brings your total down to $123,500.

As a corporation you have access to some terrific tax breaks on your investments and retirement accounts such as 401(k) plan which you can load $43,100 and write it off against your taxes. That money goes straight into a sheltered investment account, as with a regular 401(k).

Why $43,100?

That's because with a Solo 401(k), you're both the employer and the employee…as the employee you get to contribute a maximum of $16,500 as with any regular 401(k) and as the employer you also get to lavish yourself with an incredibly generous company match of up to 20% of net income. Being the boss has its privileges and if you're 50 years old or over your limit as an employee it’s raised from $16,500 each to $22,000.

You can also save another $10,000 by also contributing to your individual retirement accounts, $5,000 for you and $5,000 for your spouse reducing your taxable income and if you're 50 years or over, your limit rises to $6,000 apiece.

If you contribute $43,100 to your Solo 401(k), and $10,000 into two IRAs, that brings your income for tax purposes down to just over $70,000.

Next, write off your state and local taxes which we will estimate comes to $10,000 which approximates another $10,000 mortgage interest at 5% interest on a $200,000 home loan bringing our taxable income to $50,000.

Let’s talk about health insurance. You can write off the premiums for yourself and your spouse and your kids.

If you use a qualifying high deductible health insurance plan there are a variety of rules to make sure the plan qualifies to give you another break. You can contribute $3,050 a year into a tax-sheltered “Health Savings Account” or $6,150 for a family and you can write those contributions off against your taxable income which these investments can grow sheltered tax-free. If it’s a qualified plan the withdrawals are tax-free. Let’s assume your payout is $10,000 for the premiums and $6,150 for the HSA contributions which now gets your income down to $34,000.

If you have outstanding student loans you can write off $2,500 in interest per year and you can write off $4,000 of your kid's college tuition and fees.

Then there's a personal exemption: $3,650 per person. If you're married with one child, that's $10,950.

With all of that your taxable income is just under $17,000 compared to our original income of $150,000…you owe less than $1,700 in federal income tax.

Now let’s look at tax credits which attack your tax liability dollar for dollar.

GE got write offs related to green energy but there are some for you but on a smaller scale. You can claim credits for things like installing solar panels, heat pumps and energy efficient windows in your home giving you a tax credit write off of $1,500 bringing down your taxes to $200.

Now let’s say spouse spends $1,000 on a qualifying adult education course which you can claim $200 or 20% of the cost in lifetime learning credits to a maximum is $2,000 thereby completely wiping out your remaining tax liability.

Congratulations! You've pulled a GE. You owe no federal income taxes at all.

You could have also written off a further $3,000 by selling any loss investments, a 401(k) deduction for your spouse as well.

What’s the end result?

Corporations beat trusts hands down.

You've paid no federal income tax while saving $19,000 toward your retirement through social security and Medicare and $53,000 through your 401(k) and IRAs. You've also paid for your accommodation which is the interest and property taxes on your home, covered your health care costs, written of a lot of expenses through your business account plus paid $4,000 toward your child's college costs and had about $2,000 left over.

Did I mention that your 401 (k) and self directed IRA accounts could open an IBC in the Cayman Islands which could possibly earn over 512% tax free in two years.

Did I forget to mention your Nevada Corporation’s corporately Defined Benefits Plan and Corporate Sharing Plan allows you a gigantic $1,200,000 million dollar tax write off while giving back to you a $600,000 tax free loan plus a whopping income of $420,000 per year or in other words a $35,000 annuity payable to you each month.

As CEO and President of your Nevada corporation… did I forget to mention your yearly tax free dividend, interest free company loan, section 179, corporate jet, limousine, company sports car, corporate resort, company motor home, boat, corporately owned vacation resort properties, company time shares, corporate 419 plan, 412(i) plan, VEBA plan and 501(c) 3 non-profit charities, and Family Endowment Foundations.

Bottom line…it pays to incorporate and the best place to incorporate is in tax-free Nevada!

---