By Dr. James M. Dahle, WCI Founder
More income is almost always a good thing, but not all income is created equal. Inadequate financial literacy often leads to paying too much tax on the income you do have. In this post, we’ll examine 13 ways to reduce the tax bill on the income you have.
13 Ways to Reduce Your Taxes
Most of the time when people talk about reducing their tax bill, they’re talking about gaining tax deductions and credits. That’s not what this article is about. This article is about shifting income from one type (that is more heavily taxed) to another type (that is less heavily taxed).
#1 File as an S Corporation
When you file taxes as a corporation and take the S election, you can split your income between salary and distributions. Both are taxed at ordinary income tax rates, but both are NOT subject to employment taxes. Only salary is. Lower earners (less than the 2023 Social Security Wage Limit of $160,200) can save up to 15.3% on their taxes (slightly…
This article was written by The White Coat Investor and originally published on www.whitecoatinvestor.com