Element 05 of 10
Tax Strategies
How do we preserve more of what you have earned?
What this Element covers
Strategic positioning of income across all tax environments can contribute to financial success. It’s important to recognize the blind spots before incorporating tax strategies into your planning. The first step is understanding how these environments are defined in order to effectively use them.
Covers the income needed for basic human necessities; food, shelter, entertainment. Everything here is an after-tax expense. Without any action, all income defaults to this highly inefficient environment.
Business owners, with the right knowledge, use this environment to exploit favorable tax treatment for excess income within the corporate structure. Entities include, S-Corp, C-Corp, or the LLC and may be used for general corporate deductions.
Saving for retirement is best accomplished in a tax-deferred environment. Examples are pre-tax 401(k) contributions, SEP plan contributions, and defined benefit plans (a.k.a. Cash Balance Plan). Depending on the vehicles used, money may be saved before or after tax. Earnings are tax-deferred and withdrawals may or may not be taxed.
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