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Putting funds into a corporation to lower my personal taxes?

Discussion in 'Business & Tax Advice' started by PJeck, Jun 21, 2012.

  1. PJeck

    PJeck Registered Member

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    Hey all,

    Not sure if this is the right place to ask about this, but I'm hoping someone here may have some tax advice for me. I file my taxes each year as self-employed with a 1099 form. I tend to get hit really hard with taxes, as I never have many expenses to deduct, other than computer and travel related expenses. Recently, a friend and I went in on a corporation and we have a bank account associated with it. I've heard talk of being able to put your personal earnings through corporate bank accounts in order to lower the amount that you need to pay on your personal taxes. For instance, if I make $40,000 this year, obviously the IRS will want a solid 20+% of that, but is there some way I can put some of that money through my corporate account and file losses, and then pay less on my personal income?

    I know I sound like a complete noob (which I am, admittedly) but I would love some advice from others who have experience with paying as little on taxes as possible.

    Also, is this the sort of question I can just straight up present to a CPA and expect a straight answer? Obviously, I don't want to do anything illegal or risky, but I've heard of so many people using LLCs or corporations to dodge taxes that I imagine it can't be too hard to pull off, you know?

    Thanks for reading! I appreciate any and all feedback.

    -PJeck
     
  2. hawgbert

    hawgbert Jr. VIP Jr. VIP Premium Member

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    You should speak with a CPA, because a lot of the potential tax benefit depends on other factors. A good CPA does this kind of work all the time and will be happy to help reduce your tax liability. They'll give you the guidelines, but it'll be up to you to decide how aggressive you want to be when you file your taxes.

    In my case, an S-Corp helped make a big difference in the amount I paid to the IRS. Good Luck!
     
  3. hubertus

    hubertus Newbie

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    yes you can lower your taxes if u do business with your corporation however you have to pay taxes if you pay to dividents. In this case it is you.
     
  4. aamizan

    aamizan Newbie

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    It really depends on:

    1) how agreessive you want to be with your tax writeoffs. In practice, the IRS allows slightly more leeway for a well-documented corporate entity in taking writeoffs but if you are sloppy and mix your books, then it really doesn't make a differenece (or it can get even worse than simply declaring as self-employed)
    2) how much money you are really making. A good rule of thumb would be that if you are netting over 60-70K per year, you are better off starting an S Corporation. The money you will pay in accounting fees, payroll taxes etc would be less than the amount you will save in income taxes.

    PM me if you need more information on how to set something up. We do this all the time for customers and can provide references.
     
  5. TheSeller

    TheSeller Newbie

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    I think that's kinda illegal
     
  6. a32337

    a32337 BANNED BANNED

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    It's not illegal depending on your intent. Check out: http://www.sba.gov/category/navigation-structure/starting-managing-business/starting-business/establishing-business/incorporating-registering-you-0

    Most people have LLCs to get out of the downfalls that sole proprietorship has to offer.

     
  7. myelbow4

    myelbow4 Newbie

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    you do not belong on this forum. Read the title of the website.