Tax Strategy: Does it cost more than it saves?

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Cutting tax is a tool. But it’s never a goal. You can go too far cutting taxes until it starts increasing your taxes. Sounds crazy but it’s true

Here’s the whole story that never gets told.

In every case, there is a sweet spot where the money left over hits its high point. If you don’t go far enough, you pay more tax than the law requires. If you go too far, your tax strategy actually starts eating into the money-left-over-after-paying-taxes.

Here’s an example:

Retirement vehicles (IRA’s, SEP’s & 401(k)’s) all produce temporary tax deductions when you invest. But they also produce taxable income when you liquidate the investment. So any temporary tax benefit is wiped out when you take the money out. Plus they also have the nasty effect of converting long term capital gains (20%) into ordinary income (39.6%). Plus, if your heirs inherit one of these from you, they pay tax. Retirement vehicles may be good life planning, but they are not tax shelters.

The platinum standard of tax strategy: 99% of business owners are paying more tax than the law requires, because they are not taking advantage of all the tax preference and tax saving devices embedded in the tax code by the U.S. Congress to benefit small businesses. You aren’t eligible for all of them, but you are eligible for some of them. A great tax professional will ask you for some information about your lifestyle and spending habits we needed to determine which tax preferences would benefit you the most. Then develop a tax strategy designed specifically for you in your present circumstances. Finally, tax professionals advise you on what you needed to do to utilize these tax preferences. The result is your tax strategy. Over the years as your circumstances change, we adjust your tax strategy and make the necessary recommendations to you. We never recommend anything that won’t save you more than it costs.

A tax strategy has the following benefits:
(1) It doesn’t require any extra spending.
(2) It saves more than it costs.
(3) You live your preferred lifestyle.
(4) No additional spending required.
(5) We take the money you spend and find legitimate ways to deduct it.
(6) Think of this as ‘deducting your lifestyle’.
(7) That’s our specialty.

Cutting tax using this method costs zero dollars. Cutting tax any other way costs 100% to save 39.6%. (You may save only 15% or 20%.)

At EllisCPA, all our tax strategies are designed for owners of closely held businesses. They are original, proprietary & innovative. They will save you money in every circumstance.

Original: Everyone’s circumstances are unique. So are the solutions. Your tax strategy is designed to fit your exact circumstances. This is not a one size fits everyone business.

Proprietary: These are Ellis’ creation. As far as we know, no other firm in the world offers anything like the tax strategies we use. Top Manhattan firms have versions for publicly traded companies, but they aim at company taxes. We aim at the owner’s tax. Totally different. Apples & oranges.

Innovative: the magic happens when a creative innovator with four decades of deep tax knowledge meets a business owner with a unique predicament.

We are prepared and ready to defend all our tax strategies before the IRS. But we’ve never been challenged and we don’t expect any of our strategies will ever be challenged. To the outside world, they don’t look like tax strategies, they look like business strategies that happen to kick off tax savings. Because that’s what they are. None of them are so cute they will run afoul of the smell test.

Remember … Buying tax deductions costs 100% to save 39.6%.

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