Pays Less Taxes How to pay less tax legally, and keep every saving on solid ground

Tax planning uses the choices the law offers: how your business is taxed, how you pay yourself, which plans you fund and when you buy. The IRS forms are built around those choices, and owners are expected to use them.

Evasion is hiding income or claiming costs that weren't real. Every move on this site is the first kind, with the records to show it.

The IRS lets a business deduct costs that are ordinary and necessary for its line of work. Ordinary means owners in your line of work commonly pay it. Necessary means it helps the business and makes sense for it.

Examples: a laptop you use for the business, software, a work truck, a trade show trip, and the business share of your phone. A trip counts when its main purpose is business. Business meals are generally 50% deductible.

Records are what turn a deduction into one you can keep. Make them as things happen.

• Receipts and invoices for what you buy.
• A trip log: when you drove, how far, and why it was for the business.
• Timesheets for family members on payroll.
• Payroll reports and W-2s for your own salary.
• The written accountable plan, and the receipts behind each repayment.
• Retirement plan and HSA statements.

Keep them for at least 3 years after you file. That's the usual window for the IRS to ask questions.

The law allows a salary, a wage or a deduction that matches what really happened.

• An S corp salary that fits your duties, your hours and what others are paid for the work.
• A child's wage that fits the job, at a rate you'd pay someone else.
• A home office you measured, used only for the business.
• A vehicle deduction that matches the business share of the miles.

Most moves for a year have to be in place by December 31 of that year. A few dates are different.

• An S election on Form 2553: inside the first 2 months and 15 days of the year it covers, or anytime the year before.
• A SEP IRA: opened and funded by your filing deadline, including extensions.
• An IRA or an HSA: funded by the April filing deadline for the year before.
• Equipment: bought and in use for the business by December 31.

These small habits protect the deductions owners already have.

• Keep business and personal money apart, with a separate business account and card.
• Pay an S corp owner a fair salary through payroll, and take the rest as distributions.
• Use a home office space only for work.
• Log trips as they happen, with an app or a notebook in the car.
• Pay family members through payroll, with a timesheet for each pay period.

A deduction or a credit you missed can often be claimed on an amended return, Form 1040-X. You generally have 3 years after you filed, or 2 years after you paid the tax, whichever is later.

If a return claimed a cost that was not real, you can fix that on the same Form 1040-X. Correcting it yourself costs less than waiting for a letter.

Is the S corp salary move legal? Yes. The tax law sets it up, and the IRS asks for a reasonable salary for the work. Paying that salary through payroll is what keeps it on solid ground.

Will these moves make an audit more likely? Any return can be picked. What protects you is records that back up each line, and those are what we help you keep.

How do I know which moves fit me? Bring last year's return to a free 30-minute call. We'll show you which ones fit and about what each is worth.