The line under your income on your pay stub is where these two systems differ. With the uneducated tax system, you deduct the three lines under your income and the remainder is what you receive. With the educated tax system, the first line is your reported income as with the uneducated tax system. However, the second line is the money you spent on the business, and you pay taxes on what is left. This is because when a business spends money it is called a business expense or tax deduction. Therefore, having your own business and being in the educated tax system, you can reduce your taxes by 40-70%. To break this down even further: If you are making $35,000 a year this could save you up to $10,000. That means it does not matter if you are making millions of dollars or a few thousand dollars. These strategies apply to you! A marginally profitable business can become a thriving business by applying these strategies.
A case study: One of my students, Stephanie, was making $50,000 a year. She took these strategies to her CPA who had been working with her families for years and always had her best interest in mind. He replied that although this program sounded interesting, he was already utilizing every deduction available able to her. Stephanie’s CPA agreed to participate in a conference call with me at Stephanie’s request. Stephanie’s CPA explained that she was paying $12,000 in taxes. While this was much less than the average person, she could have been paying even less. I introduced three strategies: helping her to reduce her FICA, deducting her healthcare, deducting education (both her and her daughter’s). We were able to reduce her total taxes paid to $800. In 15 minutes and with only three strategies, we were able to save her over $11,200!
I have had students save well over $100,000. Just think what you could do with that money!
We can start by converting your largest expenses into business expenses. We can teach you lesser known deductions (e.g. travel and entertainment, medical, seminars, books, etc.) and shift them over to business expenses. You pay them with pre-tax dollars and not after-tax dollars, reducing your taxable income.
During my years of law school, I completed an internship with a New York Supreme Court Justice and second legal internship with a law firm and also began investing in real estate. Immediately upon graduating law school and passing the bar exam, I opened my own law practice. From 1988 to 2001, I practiced with my partner under the name Miles and Gillard, where I concentrated in the area of real estate and business law.
Drew Miles
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