tax strategies

Now that I’m back doing tax strategies again, I’m seeing a lot of tax plans people have tried or heard about from a friend, neighbor, and so on. The problem is that a truly effective tax strategy is, by its very nature, personalized to you. In this week’s online workshop I’m talking about the 5 biggest mistakes I’m seeing people make so far this year.

I remember 5 years ago thinking that 2008 was going to be the best tax loophole ever. This was the year that you could sell your capital gains property and pay NO TAX or you could take a dividend distribution from your C Corporation and pay NO TAX.

How come nobody is talking about that now?

Before you invest in any business or real estate as an investor or before you partner with anyone, make sure you have a clear agreement regarding phantom income.

If you don’t handle this upfront, you could find your tax return haunted by this expensive phantom.

Phantom Income can be sneaky - and expensive!

A few weeks ago Megan blogged about the tax-free gifting rules and how to make sure you don’t accidentally trigger tax complications, for yourself or for the person you’re giving money to. That got me to thinking about a quick tax strategy you can put into place between your parents and your kids.

What’s in store for business and investments in 2008? My typical answer, of course, is It Depends.

We have an election year and so I don’t expect any drastic moves in 2008. Most likely, we’ll have another last minute AMT patch, just like 2007. Once we have the election behind us, I think we’ll start to see some dramatic changes. Here are my top 3 things to do to be best prepared for tax law changes:

Have you done your back of the envelope calculation for taxes you’ll owe for 2007? If not, this might be a good week to pull some of that information together. One of the most important questions to answer is whether you’ll be subject to Alternative Minimum Tax. Look for more strategies on how to get around AMT (and how to find out if you’re subject to it) through this Blog.

This month’s online workshops, offered as part of the First Class Lounge, are all about Last Minute Loopholes. These are the things you can do right now, to pay less tax right now.

The one thing I love about tax strategy planning is that it never gets boring. This year, 2007, looks to be a very interesting year. That’s because you can throw almost all of your old tax plans out the window if you’re subject to AMT (alternative minimum tax). If your income is over $50,000 for 2007, don’t ignore AMT — you might be subject to it this year.

The best sure-fire way to avoid or minimize AMT is to have a business. And that’s why tens of thousand of people are rushing to start a business before year end. Of course, you have to do it legally — and that’s why I’m featuring what it takes to have a business in the eyes of the IRS so you get all those deductions in this month’s First Class Lounge. There is one more wrinkle to having a business — how do you protect your assets and pay less tax at the same time?

The most successful business owners and investors I know use “outside the box” thinking. That’s what we do at Tax Loopholes and DKAffiliated™ (CPA services). We disclose tax saving strategies you can use right now to put more money in your pocket. The part that is “outside the box” is how we work with our clients to create amazing results in the quickest way possible. In fact, people that meet with me are saving an average of almost $30,000 per year — after just one meeting. It’s often not big changes, but lots of little ones, done in the right way so you have a legal and efficient strategy that makes all the difference.

How do you know if you, or your advisors, are using Outside the Box Tax Thinking? First, see how they measure up when it comes to these three strategies.

Does Your Tax Advisor Think Outside the Box?

I was putting together some strategies for Outside the Box Tax Thinking (I’ll post that in my blog post tomorrow) when it dawned on me that I used that phrase all the time … but I wasn’t totally clear what “outside the box” actually meant. So I did a little research.

It all started with this simple little puzzle that was popularized by management consultants in the 1970s. The goal was to connect all nine dots by drawing four straight, continuous lines, while never lifting the pencil from the paper. If you’ve never seen this before, give it a shot.

Connect the Dots

To save money on taxes you’ve got to know how to use the loopholes that are out there. Here’s a great example of how one taxpayer offset active income in one business against the passive losses in another.