At Tembo we’re all about helping our clients save money using smart strategies.
If you missed part one of this series you can check it out here.
Another one of our clients experienced a similar situation that would save them a substantial amount of money each year.
Maximize Your Current Situation
Our team analyzed how they were currently making money and compared that to the ideal way of structuring their income to maximize the 199A deduction. At the same time, we wanted to make sure they would comply with the reasonable compensation doctrine.
We were able to advise our client to lower their compensation and increase their profit in business.
Save, Save, Save
By doing this they continued to fully comply with the reasonable compensation doctrine, but this shift in income enabled our client to increase their 199A deduction. This also decreased wages that were subject to self-employment tax, providing additional tax savings for our client.
In the end, we saved our client $17,000 dollars a year, every year, just by restructuring their income.
When it comes to tax law, knowledge is power!