Aside from taxes, one of our biggest expenses is probably our babies. As they get older, they often get more expensive. From little$ 5 dolls to video games that cost a few hundred dollars.
As they get even older, we may spend money on them for gondolas, college, and much more. A common question that we get asked all the time is, “How can I write off money that I spend on my children? ”
Well…most CPAs will tell you that you can’t. But that are able to time be because they are not thinking strategically. You might be able to write off money that you spend on your teenagers if done correctly. We call this strategy “income shifting.”
What Is Income Shifting?
“Income shifting” necessitates changing money from one family member to another. This can give you the ability to write off the money you spend on your girls by turning them into legitimate business expenses.
So, rather than you presenting them fund for the movies or their automobile, have them help you out in your real estate business and pay them for working for you. This gives people a tax deduction for your real estate business. Then, they can use the money they payed is payable for their movies and car expenses.
What are some of the benefits of income shifting?
There’s a handful that come to mind right away:
Teach the kids good working attires,
Teach them a sense of responsibility,
Reduce your family’s overall taxes, and
Allow them start a tax-free retirement bucket.
Teaching them good working attires and a sense of responsibility by helping you at work probably seems pretty straightforward. But how does this help your family save on taxes?
Little boy and his father are cleaning the meals together at home.
The best space to explain it is to go over a real-life example. A few years ago, we met with Melissa near the end of the year to go over some year-end tax planning plans. Melissa is a full-time sales hire but also has a real estate business flipping properties.
Melissa has two boys in high school. And for those of you with minors in high school, you know that it can get expensive. The sons need fund for school, friends, movies, cell phones, and many other things. While we were meeting with Melissa and stirring small talk about weekend contrives and such, she mentioned that she was going to leant her lads to wreak the part weekend, because she had a ton of scavenging and some fix-up stuff that had to be done on one of her fling properties.
Keep see the commodity “How Hiring Your Kids Can Save You Money on Taxes” by Amanda Han here:
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