They’re successful and run off everything we can, but there’s still this excess money. Um, a lot of times people are spending money on their kids. Let’s say a, I’ll give an example of private school. I can’t deduct that, but they want to be able to deduct some money using their children. Um, and there’s a function for that and it’s using what they call a family limited partnership. There are very specific rules for the greatest Trust Attorney Las Vegas.
So if I create a partnership and it’s a husband and wife that own it, and it’s their children that are the employees or the people working in it and they do work for your escort, basically this family limited partnership is outsourcing your children’s labor to your company. Now you can use the children and you do have to use them for something in your business, whether it’s you’re using them, they’re pitchers and likeness in advertising and you’re going to pay him some money just for that or whether you’re going to have them help with maybe some janitorial stuff around the office or helping with supplies. When you do a store run, um, maybe they’re helping or you’re showing them how to do some bill pay online. There’s lots of things that can be done. The purpose of this is for the taxpayer to be teaching their kids how to run some of the business to give you solid Trust Attorney Las Vegas services.
If that is going on and the kids are are old enough for that education, you move money from your S Corp, which is a deduction there over to your family limited partnership and it pays the children. The beautiful thing with this structure is in this very rigid environment. If you meet all these rules, there’s no social security and Medicare tax that’s taken out on the wages, so you lose very little money in the transaction going from your company to your children when the children get it. The first $12,000 of income that a child gets, even if you’re claiming them as a dependent, is not taxable even without your Trust Attorney Las Vegas. So if we shift this money, I don’t pay tax and it’s still in our household, there’s also no obligation for you to leave that money in a kid’s account where the kid can do whatever they want with it. You can move it to the child’s account and a mood immediately pull it out to the parent’s account and it’s in the regulations that you’re allowed to do that. So it’s a, it’s, there’s a lots of rules to follow, but if you follow them, it is very safe. You can move the money through, you can move it back. At that point, you’ve just got your tax savings on let’s say $12,000 a kid. Use that money that now is essentially tax free to you to pay for that private school or those things that you can’t get deductions for. Um, I like to use this vehicle to pay for those types of things that we can’t get a deduction for otherwise.
Yeah. Like, um, one of the things I remember my dad did for us growing up is the money that was paid to us. That’s what paid for family vacations that we couldn’t write off. You know, cause there wasn’t a business purpose tied to it. So that was a great thing. You know, we still benefited from the paycheck, which I appreciated instead of just getting paid and not, cause I never got a tax refund when I was in high school. Um, but we still got a benefit from it and the top Trust Attorney Las Vegas. So I think, um, you know, that things that, that’s a great thing that people can do if they have the income there. And once again, yeah, there might be a cost initially with the setup of the entity, but you’re still, your tax savings should cover that the first year and then you already have the entity set up. So the next year it’s 100% savings to you, uh, going forward. So I think it’s just, you know, running the numbers and understanding, yeah, there’s a little bit of cost, but let’s look at the overall and what that’s going to do
for our family. I want to say we often that took a point. You mentioned family vacation and it’s an item that I get a lot of in the, what are some mistakes people make in the business space? It’s the V the wanting to write off the occasions. I have people that say, Hey, I went to Disneyland with the family but I want to run it off cause my wife works with me and while we waiting in line, we talked about business stuff. You’re not going to win on that in an audit without Trust Attorney Las Vegas. I have people going, Hey I went to Hawaii and I looked for rental properties. I would get a couple of business cards. Can I write up the whole trip? No. The way the tax code works is if you go, you have to take the percentage that you’re specifically doing work. Like maybe you looked at some rental houses for a couple hours to the total hours of the rest of the trip and that’s the percentage you get.
It’s going to be a very, very small percentage. You’re not going to get very much for it. Um, that being said, if you’re doing a trip, let’s say to where, um, you have some family and it’s not one of these destinations that’s known as a vacation destination and you are going to do some, uh, either networking for, uh, the type of industry that you’re in or even just real estate. I’m going to look at some properties there can be better Trust Attorney Las Vegas. Maybe it’s a rental property and you and you get some contacts that you have proof for that. That is a space where you can take some deductions. And again, it’s looking at these things you’re naturally spending on which ones can I deduct the space that’s going to get you in trouble. The ones that are classic vacation destinations, the IRS agent doesn’t even have to look it up. Anaheim, they know is Disneyland.