{"id":791,"date":"2018-04-03T20:02:45","date_gmt":"2018-04-03T20:02:45","guid":{"rendered":"http:\/\/www.himmelsteinfinancial.com\/?p=791"},"modified":"2018-04-03T20:33:39","modified_gmt":"2018-04-03T20:33:39","slug":"tax-leveraging-the-new-tax-law","status":"publish","type":"post","link":"https:\/\/staging.himmelsteinfinancial.com\/index.php\/tax-leveraging-the-new-tax-law\/","title":{"rendered":"Tax leveraging the new tax law"},"content":{"rendered":"

<\/p>\n

Tax leveraging the new tax law<\/span><\/h1>\n
\n

Under the new tax structure, businesses may elect to be taxed at a lower rate than individuals that own them. Many owners and their key people may be personally taxed as much as 37% federally.\u00a0 Even this new rate can be a misnomer because at certain levels of income particular deductions are being phased out for families and individuals.\u00a0 Many of these same people have other holdings such as real estate\u00a0and\/or they are blessed with a spouse who might work.\u00a0 All of these circumstances can accentuate the amount of taxes they pay.<\/p>\n

In the past, it definitely did\u00a0not pay\u00a0to either have their\u00a0LLC taxed as a corporation or be incorporated and taxed as a C corporation.\u00a0 Many professionals, though, were required to be a professional corporation which means that the first dollar of income was taxed at the highest rate. There was no leveraging\u00a0of tax brackets because the personal and the business tax brackets were the same due to the other benefits of having\u00a0flow through taxable entities (Sole Proprietorship, Partnership, LLC, S Corporation).<\/p>\n

Many of these same people who own their own businesses are either accumulating money outside their corporation or paying nondeductible expenses such as LTC, life Insurance, health insurance, disability insurance, etc, personally because of the tax ramification\u00a0\u00a0\u00a0Previously, from a federal tax perspective, owners were required to earn $14,000- $15,500 to pay for a $10,000 premium, under the new tax law, it only will\u00a0take $12,100 to make the same purchase.\u00a0 Obviously, the more income the family has who\u00a0owns the\u00a0business the more dramatic the effect of this taxation.\u00a0 Most people would rather pay out nondeductible expenses as well as accumulate money at the least\u00a0taxed rate.*<\/p>\n

To emphasize the power of this opportunity, I am presenting a three part series on tax leveraging programs which utilize the effects of the new tax law.\u00a0 The first offering is the\u00a0Tax Leveraged LTC<\/span>. The second is the\u00a0Tax Leveraged Death Benefit Plan<\/span>\u00a0and the third is the Tax Leveraged Supplemental Retirement Plan<\/span>.\u00a0 Each of these proposals highlight how\u00a0business owners and executives can take advantage of this new lower corporate tax rate:<\/p>\n

The Business Owners Perspective<\/strong><\/p>\n<\/div>\n

    \n
  1. Able to either deduct or loan out to the executive on a favorable basis<\/li>\n
  2. Can be totally discriminatory to include only owner, key employee, \u00a0or both<\/li>\n
  3. Can be used as a golden handcuffs on employee<\/li>\n
  4. Business owner gets 100% of their money back or benefits whichever are higher.<\/li>\n
  5. Can choose the flavor \u00a0of the benefit such as LTC, chronic care, life insurance, supplemental retirement<\/li>\n
  6. Can have an element of deferred compensation<\/li>\n
  7. Able to transfer many dollars on a favorable basis from the business to the executive with little taxation.<\/li>\n<\/ol>\n
    From The Employees Perspective<\/strong><\/div>\n
      \n
    1. Able to get meaningful benefit that they would have trouble obtaining on their own<\/li>\n
    2. Able to pay less tax then they would if they had to afford the premiums personally<\/li>\n
    3. Able to get corporate dollars to personal dollars on a very favorable tax rate<\/li>\n
    4. Can emphasize what is more important to themselves LTC Benefit, Life Benefit Supplemental Retirement or 2 of the items.<\/li>\n<\/ol>\n
      \n

      * Of course one objection would be for that business if there is a planned sale and that business would have potential large long term capital gains of not paying the double tax.\u00a0 However nobody investigated not owning assets in the company or starting a separate management company that got taxed as a corporation.\u00a0 OF course consultation with qualified CPA would help in what if scenarios.<\/em><\/p>\n

      We have three different versions of this plan depending upon what is most important to the client.\u00a0 Either they can emphasize LTC as the primary element, Death Benefit Coverage Only. or possible Supplemental Retirement at lower tax cost dollars to be used to ultimately covert the benefits to lightly or non taxed <\/strong><\/u>benefits in the persons higher personal tax bracket.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

      Tax leveraging the new tax law Under the new tax structure, businesses may elect to be taxed at a lower rate than individuals that own them. Many owners and their key people may be personally taxed as much as 37% federally.\u00a0 Even this new rate can be a misnomer because at certain levels of income […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"spay_email":""},"categories":[1],"tags":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/pdUwpZ-cL","jetpack-related-posts":[{"id":786,"url":"https:\/\/staging.himmelsteinfinancial.com\/index.php\/professional-tax-relief-act-of-2018-reap-the-rewards\/","url_meta":{"origin":791,"position":0},"title":"Professional Tax Relief Act of 2018 Reap the Rewards","date":"03\/27\/2018","format":false,"excerpt":"These are exciting times because for the first time in years there are tax breaks that a professional can get that they didn\u2019t have available before.\u00a0 The unintended consequences of the recent tax act gave opportunity to the professional person that fits in the category if they wanted to be\u2026","rel":"","context":"Similar post","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":829,"url":"https:\/\/staging.himmelsteinfinancial.com\/index.php\/tax-leveraged-life-insurance\/","url_meta":{"origin":791,"position":1},"title":"Tax Leveraged Reduced Cost Life Insurance","date":"05\/08\/2018","format":false,"excerpt":"There is an opportunity for your company to pay for Reduced Cost Life Insurance which may be leveraged between different tax brackets, either between your company and yourself and\/or your company and a key employee.\u00a0 At Himmelstein Financial, we design a solution for business members which allows for a transfer\u2026","rel":"","context":"Similar post","img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.himmelsteinfinancial.com\/wp-content\/uploads\/death-benefit-split-dollar-1.jpg?resize=350%2C200","width":350,"height":200},"classes":[]},{"id":842,"url":"https:\/\/staging.himmelsteinfinancial.com\/index.php\/tax-leveraged-supplemental-retirement-income\/","url_meta":{"origin":791,"position":2},"title":"Tax Leveraged Supplemental Retirement Income","date":"05\/17\/2018","format":false,"excerpt":"There is an opportunity for your company to pay for a Supplemental Retirement plan which may be leveraged between different tax brackets, either between your company and yourself and\/or your company and a key employee.\u00a0 We designed a solution for business members which allows for a transfer of capital from\u2026","rel":"","context":"Similar post","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":795,"url":"https:\/\/staging.himmelsteinfinancial.com\/index.php\/tax-leveraged-long-term-care-plan\/","url_meta":{"origin":791,"position":3},"title":"Tax Leveraged Long-term Care Plan","date":"04\/06\/2018","format":false,"excerpt":"There is an opportunity for your company to pay for a Long-Term Care policy which may be leveraged between different tax brackets, either between your company and yourself and\/or your company and a key employee.\u00a0 The Himmelstein Financial, in cooperation with Lincoln Financial, designed a solution for business members which\u2026","rel":"","context":"Similar post","img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.himmelsteinfinancial.com\/wp-content\/uploads\/Tax-Leveraged-LTC-SPlit-Dollar-Plan-300x232.jpg?resize=350%2C200","width":350,"height":200},"classes":[]},{"id":129,"url":"https:\/\/staging.himmelsteinfinancial.com\/index.php\/advisors\/","url_meta":{"origin":791,"position":4},"title":"25 Items Advisors Need","date":"05\/11\/2016","format":false,"excerpt":"25 Items Advisors Can Find Opportunities with Their Clients and Look like a Hero at the Same Time If you read this and it sparks attention please don\u2019t be afraid to call or email. Waiting or talking RMDs only at retirement. If they hate paying taxes now they will hate\u2026","rel":"","context":"Similar post","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1132,"url":"https:\/\/staging.himmelsteinfinancial.com\/index.php\/2018-professional-corporation-tax-savings-act-presentation\/","url_meta":{"origin":791,"position":5},"title":"2018 Professional Corporation Tax Savings Act Presentation","date":"03\/25\/2019","format":false,"excerpt":"","rel":"","context":"Similar post","img":{"alt_text":"","src":"https:\/\/i0.wp.com\/staging.himmelsteinfinancial.com\/wp-content\/uploads\/0001-4.jpg?resize=350%2C200&ssl=1","width":350,"height":200},"classes":[]}],"_links":{"self":[{"href":"https:\/\/staging.himmelsteinfinancial.com\/index.php\/wp-json\/wp\/v2\/posts\/791"}],"collection":[{"href":"https:\/\/staging.himmelsteinfinancial.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/staging.himmelsteinfinancial.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/staging.himmelsteinfinancial.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/staging.himmelsteinfinancial.com\/index.php\/wp-json\/wp\/v2\/comments?post=791"}],"version-history":[{"count":2,"href":"https:\/\/staging.himmelsteinfinancial.com\/index.php\/wp-json\/wp\/v2\/posts\/791\/revisions"}],"predecessor-version":[{"id":794,"href":"https:\/\/staging.himmelsteinfinancial.com\/index.php\/wp-json\/wp\/v2\/posts\/791\/revisions\/794"}],"wp:attachment":[{"href":"https:\/\/staging.himmelsteinfinancial.com\/index.php\/wp-json\/wp\/v2\/media?parent=791"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/staging.himmelsteinfinancial.com\/index.php\/wp-json\/wp\/v2\/categories?post=791"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/staging.himmelsteinfinancial.com\/index.php\/wp-json\/wp\/v2\/tags?post=791"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}