The Top 5 Tax Strategies

If you're looking for effective tax strategies to reduce your taxes, this information is for you. Keep reading and know the 5 best ways to minimize your tax burden, as well as other tips to take care of and maximize your income.

Here are the five topics that we will develop in this edition:

1. What are the most common tax scams?

2. How can I use the magic of depreciation to avoid paying taxes?

3. General partner and limited partner. What are its tax advantages and disadvantages?

4. What is the "Top 5" of Tax Strategies?

5. How to generate $1 million with only $17 per day?

1 - What are the most common tax scams?

A list that can save your identity:

The Internal Revenue Service concluded its annual "Dirty Dozen" list of tax scams for 2023. The list is a reminder for taxpayers, businesses and tax professionals to protect themselves during and after filing season against various scams that put them at risk of losing money, personal information, data and more.

The IRS, state tax agencies and the U.S. tax industry, including tax professionals, have taken numerous steps since 2015 to warn people of common scams during tax season and beyond. The initiative is committed to protecting taxpayers, businesses and the tax system from fraudsters and identity thieves.

According to the IRS website, this list is not a formal agency document, but is intended to alert taxpayers and the tax professional community to various scams.

Among the most prominent types of scams on the list are:

Employee Retention Credit Claims: You should be aware of scammers who promote large refunds related to the employee retention credit (ERC), through which they intend to deceive people ineligible to claim the credit. These promotions may be based on inaccurate information related to eligibility and credit calculation. In addition, some of these ads exist solely to collect personally identifiable information from the taxpayer in exchange for false promises. Scammers then use the information to carry out identity theft.
Phishing and smishing: Be alert to false communications from those impersonating legitimate organizations in the tax and financial community, including the IRS and states. These messages come in the form of an unsolicited text message (smishing) or email (phishing) to lure unsuspecting victims into providing valuable personal and financial information that can lead to identity theft. The IRS initiates most contacts through regular mail and will never initiate contact with you via email, text or social media regarding a bill or tax refund.
Online account for help from third parties: Scammers pose as "helpful" third parties and offer to help create an IRS online account for taxpayers in IRS.gov. Actually, no help is needed. The online account provides you with valuable tax information, but the third parties who make these offers will try to steal your personal information in this way.
Fake charities: Fake charities are a problem that increases every time a crisis or natural disaster occurs. Scammers create these fake organizations to take advantage of the public's generosity. They seek money and personal information that can be used to further exploit victims through identity theft. Taxpayers who give money or assets to a charity can claim a deduction on their federal tax return if they itemize the deductions, but charitable donations only count if they go to a qualifying tax-exempt organization recognized by the IRS.
Unscrupulous Tax Return Preparers: Most tax preparers provide exceptional and professional service. However, you should be wary of suspicious tax professionals and watch out for common warning signs. One of the main alerts is when the tax preparer refuses to sign the return. Avoid these "ghost" preparers, who will make a tax return but refuse to sign or include your IRS Tax Preparer Identification Number (PTIN) as required by law. You should never sign a blank or incomplete statement.
Social media: Social media can circulate inaccurate or misleading tax information. This may include, for example, common tax documents such as Form W-2 or less popular ones such as Form 8944. While the latter is real, it is intended for a very limited specialized group. Both scams encourage people to submit false and inaccurate information in hopes of getting a refund.

Don't be a victim, help stop fraud and scams by trusting reputable tax professionals.

Fountain. https://www.irs.gov/es/

2 - How can I use the magic of depreciation to avoid paying taxes?

What is depreciation and what are Section 179 and additional depreciation?

Depreciation is an accounting concept that allows companies to spread the cost of assets over their useful life. It is a valuable tool for businesses as it allows them to write off the cost of an asset over time, reducing their taxable income in the process.

Section 179 and additional depreciation are two types of depreciation that businesses can use to maximize their tax savings.

Section 179 allows businesses to deduct the total purchase price of qualifying equipment or software purchased during the fiscal year. This deduction is available for both new and used equipment and through it, businesses can invest in new technology and equipment without worrying about paying taxes on it. This makes it easier for companies to remain competitive, as they can invest in the latest technology without having major financial implications.

Additional depreciation is used to reduce the value of certain assets for tax purposes. It allows companies to depreciate an asset faster than the standard rate, resulting in a further reduction in taxable income. This can be beneficial for businesses because it reduces their tax liability and increases their cash flow. Additional depreciation can also be used strategically to reduce taxes in specific years when incomes are higher than usual.

How to calculate your tax deductions using Section 179 and additional depreciation?

Calculating your tax deductions using these alternatives can be a great way to reduce the amount of tax you have to pay. Here's how:

Start by evaluating the assets you've purchased for your business during the tax year.
Check Section 179 regulations to determine which assets you can deduct. This usually includes office equipment, machinery, and furniture.
Calculate the total cost of the assets you want to deduct, taking into account any discounts or credits you've received.
If the total cost of the assets you want to deduct is less than the Section 179 limit (currently $1 million), then you can deduct the total cost of the asset.
If the total cost of the assets you want to deduct exceeds the Section 179 limit, then you can use the additional depreciation to further reduce your taxes.
To calculate additional depreciation, you must determine the useful life of the asset and the depreciation method you will use (either the straight-line method or the accelerated method).
Use a depreciation table to calculate how much depreciation you can deduct each year. This is usually done by dividing the cost of the asset by its useful life.
Be sure to follow all tax regulations and file all necessary forms to claim these deductions.

Remember that it will always be an interesting option to seek the support of expert professionals in the field, who can advise you to follow all tax regulations and be able to submit the necessary forms during the process.

What qualifies for the Section 179 deduction?

The Section 179 deduction is a tax incentive that allows businesses to reduce taxable income and can be especially beneficial for small businesses. Qualifying assets include tangible movable property, such as machinery, equipment, furniture, and vehicles, as well as off-the-shelf computer software. In the case of properties, businesses must use them for business purposes in order for them to qualify for the deduction.

What limitations apply to the Section 179 deduction?

These limitations include restrictions on the total amount of deductions allowed, eligibility requirements for businesses and equipment, and limits on the amount of deduction that can be taken in a year.

Here I explain some of the main ones:

Deduction Limit: The current deduction limit is $1 million per tax year. This means you can't deduct more than $1 million in assets during that time.
Spending limit: The limit on total spending on assets during a fiscal year is $2.5 million. If you spend more than this amount on assets, the amount you can deduct under Section 179 will be reduced.
Limitations on certain types of assets: Some types of assets are not eligible such as buildings, land and certain types of vehicles.
Use requirements: In order to claim the Section 179 deduction, you must use the asset in your business more than 50% of the time during the tax year in which you purchased it.
Net investment in the asset: The amount you can deduct cannot be greater than the net investment in the asset. The net investment is calculated by subtracting any amount you received from the sale of the asset from its original cost.

It's important to keep these limitations in mind when calculating your tax deductions through Section 179. If you have specific questions about how these limitations apply to your business, you may want to consult with a tax professional or financial advisor.

3 - General partner and limited partner. What are its tax advantages and disadvantages?

Being a general partner or a limited partner is an important decision that entrepreneurs must make when it comes to investing in private equity. Both roles have different responsibilities and implications for the investor, so it's important to understand the differences between them.

What are the differences between being a general partner or a limited partner?

General Partner:

You have unlimited liability in the partnership, which means you must assume all debts and obligations of the partnership, even if they exceed your initial investment.
He has full control over the management of the company and can make important decisions without the consent of the limited partner.
He is responsible for the decision-making, supervision and administration of the company.
He usually devotes all his time and attention to society.

Limited Partner:

You have limited liability in the partnership, which means you are only liable for the debts and obligations of the partnership up to the amount of your initial investment.
It has no control over the management of the partnership and cannot make important decisions without the consent of the general partner.
It is not responsible for the decision-making, supervision and administration of the company, as its role is primarily to invest capital.
He may not devote all his time and attention to society, as he normally participates in other business or responsibilities.

Therefore, the main differences between being a general partner and limited partner concern responsibility, control and decision-making in the partnership.

If you want to have more control over the management of the company and make important decisions without the need to consult with another partner, being a general partner may be the best option. However, if you want to limit personal liability and not have to assume all the debts and obligations of the partnership, being a limited partner may be the most appropriate option.

What are the tax advantages and disadvantages of being a general partner and limited partner?

General Partner:

Advantages: You can deduct the personal expenses you make for the company.
Disadvantages: You are personally liable for all debts and obligations of the partnership, even if they exceed your initial investment. In addition, you must pay taxes on all profits and losses of the partnership, even if you do not receive them directly.

Limited Partner:

Advantages: You only pay taxes on the profits you receive from the partnership, and you do not have to pay taxes on the losses of the partnership. In addition, you can deduct certain partnership expenses on your personal tax return.
Disadvantages: You cannot deduct the personal expenses you make for the society.

In conclusion, being a limited partner can be beneficial in terms of taxes since you only pay taxes on the profits received and you can deduct certain expenses, but you lose control over the management of the company.

Meanwhile, being a general partner may provide control over the management of the partnership and the ability to deduct personal expenses incurred, but greater personal responsibility is assumed and taxes must be paid on all gains and losses of the partnership.

It is important to consider these factors before making a decision about what type of partner to be in a partnership.

4 - What is the "Top 5" of Tax Strategies?

What are tax strategies and why should businesses care?

They are methods that companies use to reduce their tax liabilities and maximize their profits. Tax strategies may involve taking advantage of deductions, credits, and other tax incentives available to businesses.

By understanding the various tax strategies available, businesses can ensure that they don't pay more tax than necessary. In addition, these can help companies plan future investments and create more financial stability.

What is the "Top 5" of Tax Strategies?

Tax Strategy No.1:

Place your money in tax-advantaged investments and retirement plans.

This can be a very effective way to reduce your taxes. Here are some options:

Retirement plans: Contributing to a retirement plan, such as a 401(k) plan or IRA, can significantly reduce your taxes. Contributions to these plans are deductible and in addition, the money invested grows tax-free until you retire.
Mutual funds and tax ETFs: These investments are designed to minimize the tax impact. Mutual funds and tax ETFs, for example, often invest in stocks that pay little or no dividends, reducing your tax bill.
Municipal bonds: These bonds are issued by local and state governments and are often tax-exempt. This means that if you invest in municipal bonds, you may not have to pay taxes on the interest they generate, which can significantly reduce your tax burden.

Tax Strategy No. 2:

Take advantage of available tax credits and deductions. The following options stand out in this list:

Deductions: These are eligible expenses that you can subtract from your gross income before calculating your taxes. Some common deductions include medical expenses, mortgage interest, state and local taxes, and charitable giving.
Tax credits: These are a way to directly reduce the amount of taxes you owe. Some common tax credits include the Earned Income Tax Credit, the Education Tax Credit, and the Child Tax Credit.
Business deductions: If you have a business, there are many tax deductions available that can help you reduce your taxes, such as home office expenses, office supplies, and advertising and marketing costs. You can also consider the depreciation deduction.

Tax Strategy No. 3:

For companies looking to reduce their tax liability, leveraging business structures is one of the most effective strategies.

By using different types of entities, such as C corporations, S corporations, and limited liability companies (LLCs), businesses can minimize their tax liability while also taking advantage of the benefits these structures provide.

This strategy can be particularly beneficial for small businesses that are just starting out or looking to expand. With careful planning and execution, companies can leverage these business structures to reduce their tax liability and maximize their profits. Here are some options:

RL S Companies: They are a popular form of business structure for businessmen and entrepreneurs. This structure allows business owners to avoid paying taxes on their personal earnings, as these taxes are levied directly on the business.

LLC: It is a commercial structure that combines the benefits of a corporation and a partnership. Owners of an LLC have the advantage of limited liability, but they can also avoid paying double taxation taxes that apply to corporations.
Corporations: These are business structures that offer limited liability and tax benefits. These can deduct many business expenses, which can significantly reduce the tax liability. In addition, corporations can reinvest profits without paying taxes on them until they are distributed to shareholders.

It is important to note that each business structure has its own advantages and disadvantages, and that the choice of a business structure should be carefully evaluated based on your business and tax objectives. In general, the choice of business structure will depend on factors such as the size of your business, the number of owners, and long-term tax goals.

Tax Strategy No. 4:

Use additional depreciation and expenses from section 179.

As I explained in a previous point, by taking advantage of these tools, companies can save money on taxes while investing in the growth of their business. This strategy allows companies to amortize the cost of certain tangible assets over a period of time, thereby reducing their tax base.

Tax Strategy No. 5:

Create an office in your home.

Working from home can be a great way to save money on taxes. With the right tax strategy, you can create a home office and take advantage of deductions for office space, equipment, and other expenses related to your work. You can deduct a portion of your household expenses as business expenses, such as rent, mortgage, insurance, utilities, and other expenses associated with the property.

In addition, you can deduct expenses related to the maintenance and repair of your home office. Importantly, these deductions are limited to the portion of your home that is used exclusively for business purposes.

It's important that you keep accurate records of all expenses related to your home office to ensure you're complying with applicable tax regulations.

Another advantage of having a home office is that you can reduce your transportation costs and therefore your tax costs. If you work from home, you won't have to pay for fuel or public transportation to get to work every day. In addition, if you have to travel for business meetings or conferences, you can deduct the transportation and accommodation expenses related to those trips.

Remember that before investing in any tax strategy, it's important to talk to a tax professional or financial advisor to make sure you're making the best decision for your personal financial situation.

5 - How to generate $1 million with just $17 per day?

If you don't believe me, let me show you:

The following simple math
Budget $17 per day or $510 per month.
For 30 years, consistently
With just a 10% annual profit
Your family will have a total of $1,015,602
"If I invest $100 daily... You can easily invest $17 daily

Check out my video on youtube!

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Antonio Coa, CPA

Tax Specialist &

Accredited Investor

Antonio Coa, LLC

Whatsapp: (561) 814-4558

Antonio@AntonioCoa.com

www.AntonioCoa.com