brewer12345
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Mar 6, 2003
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- 18,085
DW has a small business operating as a sole proprietor. Since start up in 2003, the business never generated more than $5k a year so sheltering all of the income from income taxes was easy: 100% of the net profits could be tossed into her solo 401k. With the kids spending more time at school, DW was able to spend more time marketing the business and in 2010 netted about $15k. Early indications are that this year will be at least as good, possibly significantly better. If so, she will pretty quickly exceed the $16.5k limit on 100% deferrals into her solo k. While she would still be able to toss 25% of her earnings above $16.5k into the solo k, because of my earnings she will be looking at a 28% federal tax rate, a 6% state tax rate and 15.3% payroll tax rate on the money she cannot defer. This adds up to a marginal rate of close to 50% on the unsheltered earnings.
I am poking through Nolo and the IRS sites, but are there any other obvious ways to shelter more income from taxes? I am not interested in anything that does not fit within the letter of the law and her home office does not meet the definition of a home office we can depreciate against her business income.
I am poking through Nolo and the IRS sites, but are there any other obvious ways to shelter more income from taxes? I am not interested in anything that does not fit within the letter of the law and her home office does not meet the definition of a home office we can depreciate against her business income.