How Can I Tell You – Part II | Gerald Novotny – Law Firm of Gerald R. Nowotny

Insight

In my last episode, I introduced you to the best singer you’ve never heard of – Lani Hall. She made a name for herself singing in Portuguese (Sergio Mendes and Brasil 66) and Spanish (beautifully I might add!) while being unable to speak either language. She won two Grammy Awards singing in Spanish. The duet with the Spanish singer Camilo Sesto Corazon Encadenado is a great romantic ballad. She still performs occasionally with her husband of fifty years, Herb Albert. Of course, Herb Albert is famous for his Herb Albert and the Tijuana Brass and co-founder of A&M Records which he sold for over $500 million.

Last week, I reintroduced the management company (“Company”), an ordinary company with a year-end. The management company provides services to the taxpayer’s operating company – financial, administrative, purchasing, marketing and sales, as well as investment management. The management fee is a tax-deductible expense for the calendar year business owner’s operating company. The management company taxed as an ordinary company has a fiscal year (say November 30) that does not end until November 30, 2023. The company’s tax return assuming an extension is not due until August 15, 2024. Assuming the business owner did nothing else, the strategy represents a significant carryover of eighteen months. However, taxpayer objectives should not be met solely through tax deferral.

The business owner can create a business employee and employee benefit that can further reduce the amount of taxable income of the company before the end of its fiscal year. The company can create a qualified retirement plan – 401(k), profit sharing, defined benefit cash balance and 401(h) post-retirement medical expense plan. Contributions are tax deductible for the Company and tax deferred for the participant (owner of the Company).

The company may also sponsor a health reimbursement agreement that would allow the company to pay for medical expenses not fully covered by the taxpayer’s health insurance – co-payments, deductibles, etc. These payments are fully deductible for the business and non-taxable for the employee. . These advantages are significant for the taxpayer who no longer produces Annex A or whose expenses do not reach the AIG threshold (7.5%). A range of lesser-known benefits such as education assistance, transportation and skilled travel, car, meals, adoption assistance, dependent care and accommodation in business premises are tax deductible for the employer (business) and non-taxable for the employee (taxpayer). ).

Summary

If you’re a business owner or executive with high income in the last two months of the year, what’s left in your “shopping bag” to reduce your federal tax exposure? and income tax? Unless you feel personally responsible for reducing the federal deficit on your own, you owe it to yourself and your family to explore your options to avoid the one-way trip to your hard-earned money to the nation’s capital. These ideas are a bit off the beaten path, are legal, and work incredibly well. How can I tell you?

Cordially,

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