Small Business Taxes For Dummies, 2nd Edition

Chapter 15

(Almost) Ten Often Overlooked Tax Reduction Opportunities

IN THIS CHAPTER

Lowering your taxable income

Taking a variety of deductions

Throughout this book, I present information and strategies to help you deal with and minimize the income taxes you’re legally required to pay. The reality is that you may not read this whole book, retain all that is covered, or get around to doing everything that can benefit your situation.

This chapter presents some commonly overlooked opportunities to reduce your small business and individual income taxes that I want to be sure you don’t miss. The income tax you pay is based on your taxable income minus your deductions. I start first with overlooked ways to minimize your taxable income and then move on to often-ignored deductions.

Invest in Wealth-Building Assets

During your working years, while you’re earning employment income, you probably don’t need or want taxable income from your investments because it can significantly increase your income tax bill. Real estate, stocks, and small business investments offer the best long-term growth potential, although you need to be able to withstand downturns in these markets.

Most of the return that you can earn with these wealth-building investments comes from appreciation in their value, ...