w2/1099- lower tax bracket?
Does anyone have information on how to lower my w2 taxable income via using the money before taxes to fund a buisness. Then paying myself a salary from the buisness and writing off my buisness expenses and submitting a 1099?
Quote:
On 2003-05-08 04:34, willtell wrote:
Does anyone have information on how to lower my w2 taxable income via using the money before taxes to fund a buisness. Then paying myself a salary from the buisness and writing off my buisness expenses and submitting a 1099?
Willtel:
Your question is not entirely clear. Could you rephrase it and provide an example so I am clear on what you are trying to achieve?
If you are thinking that you can take some of your salary income (W2 income) to fund a business and have those funds reduce the salary amount that is taxable, that can't be done. Funding a business is a capital expense and is not deductible against your salary income.
The other critical question is what is your business? It has to be a real, legitimate business (meaning, generally, that you sell a product to others -- e.g., a developer of real estate sells lots or houses to others -- or provide a service -- e.g., a real estate management company managing real estate for a fee).
The long and short of it is that what you describe will probably create no economic difference when taxes are considered (it is as if you are taking cash out of one pocket and taking a deduction only to have to claim that same amount as income in the other pocket). However, there is some limited ways to do what you describe, but they are mainly limited to C corporations or foreign corporations.
Taxjunkie