How To Save Up To $7,985 By Paying Your Children!
Many people ask just how does the new tax laws benefit me. Well, in just one instance, you can save up to $5,600 in 2018 if you have a home based business and 2 children between the ages of 7 and 17.
You see, the IRS allows you to pay your children up to the standard deduction amount each year from your sole proprietorship business. These businesses include Young Living, Mary Kay, Tastefully Simple, and the like. The payments are deductions from your business income and are non taxable to your children. The money paid to your children can be used to pay for school tuition, clothing, meals, and other items that you will pay for anyway!
The two changes that specifically will benefit you are the increase in the child tax credit and the increase in the standard deduction.
Let’s look at an example to show how much you can save:
Additional deductions from your business $24,000 ($12,000 for each child)
Tax savings assuming a 15% tax rate and
15%self employment rate savings $7,200
Increase in child tax credit $2,000
Total Tax Savings $9,200
Decrease in tax from reduction in exemptions $1,215 ($4,050 x 2 x 15%)
Net tax savings for your family $7,985
The portion that the new tax law is responsible for is about $4,385. That has to be one of the biggest tax cuts I’ve ever seen. That amount does not even take into account the rate changes!
This example is taking the tax savings to the maximum amounts and assumes that you are making a great deal of profit in your business. However, even if you have a smaller business AND you only pay your children half the amount you can, you will STILL save about $3,600 per year by paying your children.
This is just ONE strategy of saving thousands on your taxes EVERY year with a home based business. CLICK HERE for a free report on all of the rules on how to pay your children as well as a worksheet & time card!