Another trick to saving money on taxes is to take full advantage of the tax code. Accountant William Rivero of the accounting firm Correia Rivero and Lefebvre in Danbury, Connecticut, noted that both the IRS and Congress make changes to the tax code right up until the last minute.
“Deals by Congress in December can sometimes open up new opportunities for deductions, but they can also mean delays in filing are necessary,” he said. “An accountant can be very helpful in this regard.”
If you are self-employed or an independent contractor, setting up a limited liability company — more commonly known as an LLC — is one good way to enjoy a whole new set of tax breaks. This can be a great way to take advantage of tax loopholes and to maximize tax flexibility while minimizing taxable income.
There are many tax benefits to an LLC, of course, but consider one of the lesser-known perks: the personal sale-leaseback. Under this loophole, you can lease a home office to yourself in order to run your business. This lowers personal income and creates LLC income. This LLC income can then be offset by LLC expenses, which would not normally qualify as deductible personal expenses.
Remember that these expenses need to be legitimate business costs and that you need a formal lease agreement to exercise this option. But if you qualify, this is a good opportunity to exploit a tax loophole.
