It’s a really easy test. Good litmus test. So, um, other items that I tell people to think about, and this is where I’m going to talk about home office, I’m gonna put some quotations in there. You can’t see, you don’t have to use the home office deduction to do that. Things that are related to a home office in your business. So if you have a space in your home and you’re furnishing it, maybe with computer screens, maybe a really large TV, but you’re using it as your computer screen, a desk, maybe a chair or a couch, something in that space. And that’s where you go to do the work for your business. Whether it’s online research, sending out invoices, doing some bank work if that’s the space that you use for work, those items you can write off through your business. So when you’re going to home Depot and doing some repairs or you’re painting a room or you’re redoing the floor, consider if that’s the room that you use for your office. You want to try to find those types of expenses to deduct. That’s the area of space. I want people thinking now this taken too far is you read it, the floor, my whole house, I want to write all of it off. No, that’s too aggressive. But if you’re doing one space and it can be the space you use for work, think of those home expenses that you’re spending on which ones of those can you pick up. There’s a lot of times that you can run those through your business with great Trust Attorney Las Vegas.
I liked that. The philosophy of, Hey, let’s look at what we’re already spending on. We don’t need to spend more money to save 20 S, you know, spend a dollar to save 20 cents in taxes. I think that’s a wrong strategy, but let’s look at what we’re already spending on, see if we can get any of that money back for the top Trust Attorney Las Vegas. Um, just one brief thing that I, that I see from my perspective as a, an attorney, um, is people don’t know about that they can pay their kids. I think that’s one easy one. If you’re, you know, if you own your own business, what you can do to pay your kids and help have money show up on their tax return cause they pay a much lower rate than you do. Um, so if you could touch on that briefly.
Awesome. And this is one where you need to trusted advisors because there’s a tax strategy I use here, but it also requires particular incorporation. Um, and so I work with Blake on that part. Anybody that has, let’s say an S corporation and they’re making good money and we’ve already done the process to put all the expenses that we can win and they’re still having this net profit and hopefully it’s a large net profit. 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 that use Trust Attorney Las Vegas. Let’s say a, I’ll give an example of a 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.
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 that offer Trust Attorney Las Vegas as soon as you can. When you do a store run, um, maybe they’re helping or you’re showing them how to do some bill pay online. There are 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.
If that is going on and the kids 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 for the top 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 lot 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. So I think, um, you know, that things that, that’s a great thing that people can do if they have the income for your next Trust Attorney Las Vegas. 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.