How our Strategic Assessment Meeting Ensures Your Tax Savings Success

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How our Strategic Assessment Meeting Ensures Your Tax Savings Success

Just like anyone else, you want to save money on your taxes, whether it’s for your small business or personally. But how can you ensure your tax savings success? One way is to set up a plan for what you do with your taxes. But what should your plan be? And how do you set it up?

Pull up a chair: Financial Gravity would like to invite you to a strategic assessment meeting. Read more

How does the IRS view the Stormy Daniels hush money?

What does the IRS think of Stomy Daniesl hush money? How should Trump's attorney classify the payment?

Some people spend their whole lives grasping for the white-hot spotlight of fame. Others avoid it like the plague. Still others work to stand out in their field, only to make headlines for entirely different reasons. Porn “star” Stormy Daniels clearly falls into that third group. The 38-year-old performer excels in her craft, with spots in the Night Moves, Adult Video News, and X-Rated Critics Organization Halls of Fame. But despite all that hard work, she’ll go down in history for taking $130,000 in hush money to cover up an affair with the President.

(Of course, “Stormy” isn’t the name her parents gave her. Her real name is Stephanie Clifford, which makes her sound more like a debutante than a girl who started stripping at age 17 – “introducing Stephanie Clifford, of the Main Line Cliffords . . . “)

Politicians and pundits are feverishly debating exactly how and why that money wound up in Stormy’s account. Did the President or one of his associates secretly foot the bill? Is it an illegal campaign contribution or campaign finance violation? Will it find its way into Special Counsel Robert Mueller’s investigation? But really, who cares about that stuff? We want to know what the IRS thinks!

What does the IRS think?

The Tax Code defines gross income as “all income from whatever source derived,” and there’s no section excluding payoffs from presidential candidates. So it’s pretty clear that Stormy’s windfall is taxable. (Minus legal fees, of course. “Hush Money for Porn Stars” isn’t a required law school class – for most schools, it’s a third-year elective. Still, only the best lawyers have that particular expertise under their belts.)
The real question is: how is that windfall taxed? Is it ordinary income? Or could it be capital gains? And what difference would that make?

Most tax professionals would probably include the income in Stormy’s business of being a porn star. If that’s the case, it’s taxed as ordinary income at marginal rates of up to 37%. It’s also subject to self-employment tax, unless Stormy has organized her business as an S corporation and paid herself a reasonable salary to cap that particular liability.

Treat the Property as a Capital Asset!

But there may be another way to skin this particular cat. The settlement agreement itself provides that Stormy is actually selling her rights to certain information and “property.” So why not treat the “property” as a capital asset? In that case, considering the story grows out of an affair that took place in 2006-07, it would be treated as long-term gain, and tax would be capped at 20%. The gain would also be subject to a 3.8% net investment income tax if her adjusted gross income tops $200,000.

Now, what about deducting the payment? If the President’s personal lawyer is telling the truth when he suggests that he paid out of his own pocket, then he can plausibly deduct it as an expense of his law practice. The attorney also claims he originally pulled the cash out of his personal home-equity line of credit, which means he can deduct the interest he pays, too.

Want a free book on the new tax law?

Here at Financial Gravity, we confess we have no experience whatsoever with tax planning for hush money. But we’ve helped business owners just like you save thousands on their taxes. We also just created the first book we are aware of on the implications of the new tax law. The New Tax Law book doesn’t just walk through you the new rules. We explain how to take advantage of the most powerful strategy for paying less tax. And that strategy is planning, proactive planning (not the reactive planning most people do now, which doesn’t work) and most important, strategic tax planning!

How do you get your FREE copy of The New Tax Law? Schedule a FREE assessment call  today with a Financial Gravity Tax Team Member and we will deliver the book to you for FREE. We will even cover shipping, or hand deliver it to you when possible. Schedule your FREE assessment today, get a free book and stop wasting money on taxes you don’t have to pay!

5 Ways to Save Big on Taxes for Your Small Business

5 ways to save big on taxes for your small business

The IRS tax code actually provides many ways for small business owners to save big on their taxes–ways that many of which business owners may not be aware. Here are just five:

Lease Your Home to Your Business for the Maximum Time the IRS Allows

Your home has to be rented for less than 15 days to get the deduction. For example, if you have a board meeting every month, you could host all 12 in your home and claim the deduction. You must also rent your home at a fair rate. The IRS does not allow you to just make up an arbitrary amount to charge your company when you rent your home to your business. It must be commensurate with the average price you would pay to rent another location. You must also issue yourself a 1099 form from your company with the total rent amount paid, which you will then claim on your personal taxes. This will be offset once you list your less-than-15-days deduction. Don’t forget: you must record the minutes of any meetings you have in your home–this will provide further proof to the IRS of the validity of the business conducted there if it is called into question.

Hire Your Children to Work in Your Business as Spelled Out in the IRS Code

A business owner can hire and pay their own child under eighteen tax-free. As long as your child is doing legitimate work and getting paid a reasonable rate, you can pay them up to $6,300 per year before they have to pay a dime in income tax. However, you may still have to pay payroll taxes such as FICA and FUTA, which go towards unemployment and social security benefits. On the other hand, you don’t have to pay payroll taxes for employing your kids if your business is a sole-proprietorship, a single-member LLC taxed as a disregarded entity, or an LLC taxed as a partnership and owned solely by you and your spouse. But if your business is a corporation, you must pay payroll taxes on income to your children. Even in this last case, there may be workarounds, but these are best discussed with a professional tax advisor.

Change Your Health Plan to a Qualified HSA Plan to Save the Most Taxes Possible

HSAs escape taxation by allowing holders to save tax-free money for medical expenses not covered by insurance. Contributions are made into such accounts by employees and/or employers, and unused funds roll over from year to year. The contributions are invested, earning returns over time, thanks to the power of compound interest. Funds can be removed tax-free to pay for qualified medical expenses, including vision and dental. HSA deposits (from an employer or individual) are federal income tax-free and not subject to employment taxes. Secondly, HSA growth from income and investment appreciation is not subject to federal income taxes. Finally, if the HSA funds are withdrawn for qualified medical expenses by the account owner, spouse and/or dependents, such withdrawals are not subject to federal income tax. There is no other place in the tax code which allows ordinary income to escape federal taxation forever. But of course, you have to know the HSA rules and follow them carefully. This is another case where it would be good to consult a tax advisor to help you create the best plan for your business and unique situation.

Maximize Retirement Savings to the Fullest (If You’re Over 50 Chances Are You Are Not)

There are many legal ways to maximize your retirement savings and lower the taxes you pay on them. For example, you could start a diversified retirement plan–the funds will help cut down your tax bill now and grow tax-deferred until you make withdrawals in retirement. In most cases, the cost of opening and administering a plan is pretty small. The four main options for small business owners are a SEP-IRA, a SIMPLE IRA, a Solo 401(k) and a SIMPLE 401(k). For all but SEP-IRAs, a business can be a sole proprietorship, a partnership, a limited liability company or a corporation.

Start a Private Foundation

Establishing a private foundation is a great way to use family funds and property tax-free, all while engaging in charity. However, under the IRS Code, a not-for-profit is not exempt per se from federal income tax. In fact, a private foundation is fully taxable unless and until it applies to the IRS for recognition of its status as a tax-exempt organization; even then, it may lose its tax-favored status if it fails to file annual tax returns with the IRS.

It pays to do your homework–consulting with a tax or financial planner can greatly help with setting up tax savings strategies properly. Find out more about how you can bring on a financial advisor who will truly assist you in not only saving on your taxes but give you a solid plan for the future. Speak today with a Financial Gravity team member, Let’s Talk!

What Is the Tax Blueprint and Why Should I Care?

What Is the Tax Blueprint and Why Should I Care?

It’s safe to assume that most business owners and individuals are overpaying their taxes without even realizing it. Without a clear tax plan to guide you through the year, you’re probably one of them. That’s why Financial Gravity created its unique tool known as the Tax Blueprint in order to help its clients navigate the complex maze of the tax code. Read more

Financial Gravity’s 3-step Process To Help You Save Big And Increase Your Business Revenue

Financial Gravity’s 3-step Process To Help You Save Big And Increase Your Business Revenue

You are almost certainly losing more money than you should to taxes. In fact, you could say that like as not, your business finances are needing a trip to the emergency room. Chances are, you’re losing more revenue than you should. How can you stop overpaying taxes and increase your business revenue? Fortunately, the doctor is in, and Financial Gravity has the 3-step solution to your financial ills.

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5 Things Your Accountant Should Be Telling You About The New Tax Law

5 Things Your Accountant Should Be Telling You About The New Tax Law

The Tax Cuts and Jobs Act of 2017 represents a major overhaul of the tax code. As a business owner, your accountant should be advising you about the upcoming changes to the tax code and how to best use it in order to keep more of your income. Here are five important changes about which your accountant should be informing you that just came out in the new tax law:

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Financial Gravity launches The New Tax Law – the first 2018 tax law primer

The Tax Cuts and Jobs Act of 2017 may well be the most important tax law passed in the last three decades. While its focus is ostensibly on lowering corporate tax rates, it contains legislation that will lower taxes for many Americans from every segment of society. Read more

CPAs Lack the Ability to Think Outside the Canvas

How are small business owners and entrepreneurs like artists? Well, they combine their passion and available supplies (such as laws) to create a masterpiece (products and services that people actually want.) Entrepreneurship is associated with risk because, well, it’s risky to quit your day job with a consistent salary to start a new venture with no guarantees. After literally risking it all, it utterly amazes me that small business owners still turn to the one professional who is the exact opposite of an artist for tax advice. Yep, I’m talking about your CPA. If you show a CPA a Picasso, they’ll likely value the painting at ten bucks (or the cost of materials.) Why? Because they lack the ability to think outside the canvas.

Everyone thinks that the CPA industry does a thing that it isn’t actually trained to do. Financial Gravity, on the other hand, is trying to solve this problem by 1/ figuring out your unique situation and 2/ applying the tax code to your unique situation.  Bottom line, we help small business owners and entrepreneurs lower their personal income taxes legally, morally, and ethically by making the same strategies that the ultra-rich use, accessible and available to everyone.

Still not convinced? Ask yourself this question: When is the last time your CPA saved you at least $1000 in taxes? If your answer is “never,” then ask yourself this question. What do you think a CPA actually does?

CPAs aren’t artists, they are historians (number historians to be exact). They take what you’ve already done and record it. They don’t tell you how to do what you’ve done differently. In fact, they aren’t even trained to do proactive tax planning (which is an art in itself.) Being an artist, entrepreneur, or small business owner involves some level of risk, something that CPAs are naturally averse to. CPAs became CPAs because there is no risk involved. They may answer the questions you ask them, but they don’t get to the core of WHY you asked the question in the first place.

So, if the CPA industry can’t help you, who can? What you need is someone who knows how to ask the right questions to get to the right objectives, someone who knows that there are lots of laws located in the tax code to help business owners like you save on taxes, someone who understands the art of business…Financial Gravity.

Take this scenario for example.

I call my CPA and say “I want to put $10,000 into my IRA.” To which my CPA replies, “you can’t do that, sorry.” Financial Gravity, on the other hand, would dig a bit deeper and ask, “Are you married? If your spouse doesn’t work, then you can have your spouse put in $5000 and then you can put in $5000.”

If everything Financial Gravity recommends is legal, moral and ethical, why are CPAs so afraid of being red-flagged by the IRS if they implement the same strategies?

The simple answer is that they are just a risk-averse profession even if that risk is a fallacy. There is nothing risky about applying the laws located in the tax code to reduce your personal income taxes. That’s what they’re for. For example, there are four ways to write off a home office. If it’s a red flag to write off your home office, why are there four legal ways to do it? Bottom line, laws are hard to pass. If there’s a law in the tax code that reduces your personal income taxes, USE IT! Or call Financial Gravity and we’ll help you do just that.

As a Small Business Owner, Self-Investment is the Best Investment

Maybe you graduated with honors with a major in Communications and a minor in Business Management only to start a few side hustles in order to pay your student loans, or maybe you’re more of a self-learner, skipping college to jump straight into the workforce only to realize that you were more of a leader and less of a follower. Regardless of how you ended up in your entrepreneurial role, it’s safe to say, you probably aren’t investing much time, money, or energy in yourself anymore. And why not? Self-investment is not only a great way to expand your skill set, but according to this article on, it’s the surest way to achieve a better quality of life.

Here are some ways you can make a self-investment:

1/ Learn a new skill. You can either take an online class at your local community college, go to a relevant Meetup, or attend a nearby conference related to your industry.

2/ Read a leadership book or a motivational book. Here’s a list to get you started.

3/ Join a gym, running club, or Zumba class. According to this article on, you may even be able to deduct your fitness costs as a medical expense, but make sure you get a doctor’s note first!

Ok, I know what you’re thinking: Invest in myself? I barely have enough time to finish the tasks on my todo list, have dinner with my family, and nurture my partner every day, let alone take time to invest in myself. Besides that, all your “suggestions” require expendable income, money is tight as it is.

That’s the glorious part about getting in touch with Financial Gravity. We find you ways to keep more of your hard-earned income BEFORE you ever have to schlep it away to the IRS. Paying taxes is an inevitable part of being a small business owner, but there are literally thousands of legal, moral and ethical ways to pay less tax located in the tax code. After a 15-30 minute assessment, we will determine if we can substantially decrease your tax liability. If so, we will then develop and implement a Tax Blueprint, a clear tax reduction plan customized to you and your business. Oh, and you will always save more than what the service costs you, backed by our 2x guarantee.

So what will you do with all that extra money? Invest in yourself, of course!

Photo by Tamarcus Brown on Unsplash

Do These New Year’s Resolutions for Small Business Owners Sound Familiar?

Photo by Allef Vinicius on Unsplash

As a small business owner, you probably don’t have enough time to think about what you’re having for dinner let alone what your New Year’s resolution might be. That’s why we’ve created this list of resolutions for busy small business owners like you and then provided you with Financial Gravity-tailored solutions!

New Year’s Resolutions for Small Business Owners

1. Spend more time with my family.

“I am working 12 hours a day. I leave one hour before my kids wake up and usually make it home an hour before they drift off to sleep. Every day, I am torn between providing for my family with a comfortable life and spending quality time with them.”

Financial Gravity Solution: Having a good work/life balance is not only important, it’s imperative. While we can’t flip your flapjacks for you in the morning, we can customize a clear tax reduction plan (better known as our Tax Blueprint®) for you. Paying less in taxes means you’ll have more money to hire a middle manager, thus relieving you of your long work days and allowing you more time to build blanket forts with your kids.

2. Take more vacations.

“I thought being an owner meant I’d have more freedom, time, and money, but I am currently experiencing some growing pangs, aka chaos. Stepping away from my business at this time, even for a few days, isn’t really an option for me, everything would fall apart!”

Financial Gravity Solution: We get it. You built your business with your own two hands. The success you’ve achieved up until now is entirely due to your hard work, can-do attitude, and resilience. But even heroes need a break sometimes. According to this article in Time magazine, 94% of research respondents had MORE energy after coming back from vacation. And in this article, vacations have been proven to reduce stress, prevent heart disease, improve productivity and improve sleep patterns. Implement our Tax Blueprint®, and you’ll be able to ship less money off to the IRS and sink more money into your cruise fund.

3. Hire more employees and maybe open up another location.

“My business is experiencing rapid success and I am a bit uncertain about my next step. I don’t really have a lot of time to think about big picture stuff because I am too busy keeping up with the daily ins and outs. I also get discouraged because it feels like the more successful I become, the more taxes I owe. Sometimes I wish I could just go back to my 9-5, when life was much simpler.”

Financial Gravity Solution: You shouldn’t be punished for having a successful business and the tax code (all 70,000+ pages of it) is there to make sure you aren’t! There are plenty of legal, moral, and ethical ways to reduce your tax liability located in that thing, you just need to know where to look! If you choose to implement our Tax Blueprint®, we will develop a strategic tax plan that will reduce your tax liability for years to come. Our experts know and understand the complex rules attached to the laws located within the tax code. Because we let the tax code call the shots, you can be sure that you’re getting unbiased financial advice. You can read more about our “product agnostic” approach to financial advice on this blog post.

Financial Gravity exists so that we can help small business owners (legally) pay less in taxes, increase their profit, and attain greater wealth. If these sound like resolutions your willing to commit to in the coming year, give us a call today. After a simple 15-30 minute no obligation assessment, we’ll determine if we can substantially reduce your tax burden.

Photo by Allef Vinicius on Unsplash