Reduce Your Taxes

Edition #123

For those of you who live in the USA, tax day has just passed us by… so hopefully you either filed your income tax return or requested an extension from the IRS.

I personally wrote the biggest check I’ve ever written in my life, and sent it to the IRS. Fun, huh?

Of course I can’t complain about being blessed with good finances over the past year. But that’s no reason to pay more than my fair share to Uncle Sam.

I’ve been reading some books about wealth building lately, and while everyone has their differing opinions about how to create wealth, one common denominator is certain. It’s NOT so much about how much money you make; it’s about how much you KEEP.

So I’ve also been studying ways to run my business in the most efficient manner in terms of minimizing my tax obligations. Some of the things I’ve already done include purchasing business equipment before the end of last calendar year, which was 100% deductible for 2006, and maximizing my contributions to a SEP IRA.

Those things alone saved me thousands of dollars on my taxes, and I did several other things that helped too, but I don’t want to get too deep into it because I’m not a CPA or tax attorney πŸ˜‰

This just goes to say, you need to talk to a good CPA who KNOWS business stuff, and is up-to-date with all the ways you can reduce your taxes within the current tax code.

Don’t wait until next year when your taxes are due. Do it NOW. There are probably things that you can be doing to lower your taxes next year, but if you don’t start now you won’t be able to maximize those benefits. For example, there is one thing I am doing this year that had I done it last year it would have saved me a LOT of money on my taxes. Potentially tens of thousands of dollars of savings.

I will talk about that particular thing in the next week or so in a different edition of Eric’s Tips.

In the mean time, I would like to give you FREE access to a recording. In this 40-minute interview, we discuss the concept of using IRA’s to protect passive income generated by websites.

We were going to charge a fee for access to it, but I decided it would be a good way to get you all thinking more strategically about your online business and tax situation, so here it is for free…

(Link removed- no longer available)

(The above is a direct link to the MP3 file. You can do a “right-click save target as” to save and listen to it on your PC or MP3 player. Or you can try clicking on it and if you have Quicktime or another browser plugin you should be able to play it directly from the web.)

If you’re ready to take the first step and start reducing your taxes today, I recommend the following resource from Eva Rosenberg. She is also known as the “Tax Mamma” and she specializes in tax break-throughs for Internet Marketers.

Here’s the best part. Right now you can pick up some great tax-saving advice for only $7.77 at this page:

(Link removed- no longer available)

I still suggest meeting with a CPA, but this is a great place to start. In fact, I recommend printing out Eva’s checklist and resource sheets and bring them with you to make sure your CPA knows what they’re doing.

Most tax professionals are pretty expensive (my tax guy charges and arm and a leg…and he’s worth every penny), so this is a great opportunity to get some practical and proven money-saving techniques for a ridiculous low price.

Sorry I’ve been so quiet lately, but I’m working on something very big which I’ll be able to talk about soon…

As always, you are welcome to leave your comments here in the blog.

Have a great day!

20 comments on “Reduce Your Taxes

  1. Michael

    I don’t wish to appear cynical Eric, but if your tax guy charges an arm and a leg, but worth every penny, then how come you had to write out the biggest tribute of your life to the IRS. Seems to me you might have to educate him using Eva’s checklist, or get yourself a better tax guy!

    Regards,
    Michael

    Reply
  2. Eric Post author

    Michael – because he’s my NEW tax guy πŸ˜‰ I would have saved a lot of money if I met him sooner.

    E

    Reply
  3. Michael

    The website for the tax reduction PDF book noted above has a paypal order button that does not work. Please advise when corrected.
    Thank you.

    Reply
  4. Michael

    A Sole 401-K lets you and your wife park almost $100K a year. If you were 30 years older (like me), a defined benefit pension plan would let you shelter even more.
    It bothers me that U.S. residents have to pay high income taxes on cyberspace profits, even if it is an ebook sitting on a server in Panama and sold to a buyer in the U.K. Counting Federal and state taxes, you can about double your bottom line just by moving your business offshore. But I’ve been doing this for over 30 years, and there are too many “offshore opportunities” where they put your money in their pocket and leave. They know you won’t sue – it’s too expensive. Also, since the Patriot Act, there is only one country that still has total bank secrecy AND high-speed Internet connections – Panama. There is NOTHING ILLEGAL about booking your sales and profits in an offshore entity, and only paying taxes on the money you remit to the U.S. Also, you DO NOT have to have signature authority on a bank account – a red-light question on the 1040 tax form.
    I have affiliated with an honest group of experienced professionals from all over the world to set up the required structures in Panama. There are some MLM characteristics of the business plan, but I am mainly in it to protect my business from predatory lawsuits, slash my taxes, and move my estate out of range of Federal estate taxes. This is FREE to get started, you do not have to buy anything to stay in (unlike the MLM scams) and there will be a very modest $20 a month or so charge to have access to all the resources – the right people, lots of educational material, introductions to right institutions, and so on. If you are interested, go to http://www.gwbopc.com/.80/techperson (Please note that you have nothing to gain by cutting the affiliate code.)

    Reply
  5. Eric Post author

    Michael- The Paypal button is fixed now. Coincidentally it was MY fault, because I entered my Paypal email wrong. So I’m glad you commented about it! πŸ™‚

    Reply
  6. Simeon

    I purchased “Tax Simple” for the great price of $7.77 almost an hour ago. I don’t have a Paypal account, so I used my friend’s Paypal account. Downloads usually come immediately, but neighter I nor my friend have received the “Quickly Build a Tax Free Income” PDF, and the described bonuses. How long does it usually take to get the program? I’m not complaining. I just want to be sure that there was no mixup because I used my friend’s Paypal account.

    Reply
  7. Eric Post author

    Simeon- You should be able to access it instantly in the member area. Go back to the site and click on the Members tab atthe top. Login if you aren’t already logged in, and click the “Downloads” link.

    Reply
  8. Chris A.

    Sorry for you Guys…if you didn’t check my WebPage :http://www.productselected.com/index.php?pr=US_TaxService
    ******New for 2007! FREE Tax Calculator By popular demand, TaxBrain is making our Tax Calculator available so that taxpayers can estimate their taxes before hand. Simply provide some basic information and find out what TaxBrain says about your taxes — it’s Free!
    Lowest Fees! Online Pricing beats tax office fees because you prepare your own tax return and file online — don’t be fooled by others trying so sell you an expensive bundle either!
    Best of all, it’s convenient, easy-to-use, free to try and guaranteed accurate. TaxBrain Online handles IRS and all state tax filing – everything is done online and guaranteed accurate. No software to install, always up to date with live, U.S.-based customer service included FREE to handle your questions anytime.
    Plus, you know you can trust TaxBrain because we are the ONLY online tax service that has been IRS Authorized since 1987. In addition, we’ve been featured in national media like USA Today, Smart Computing, PC World, CNN and more.********

    Reply
  9. michelle bartels

    Eric, you don’t happen to know any good accountants in Australia do you? I’ve seen 2 and I think I’ll submit my own return! No comprehendo!!!

    Reply
  10. Franck Silvestre

    I am not US, and I don’t pay taxes at the moment, so I will pass on this one!

    Reply
  11. Justin

    Eric, Eric, Eric

    Did your accountant tell you that you can set up a non profit trust and contribute 10% to a charity of your choice and the rest is tax free?

    Did he tell you there is no law requiring you to pay any income tax at all?

    Great stuff,

    Thanks

    Reply
  12. Donawithimoms

    Hi Eric,
    Being Canadian I am grateful for your kind thoughts to us but hope to find some Canadian info for us. Bless you ,Dona

    Reply
  13. Robert

    That’s your opinion Justine. The law is not on your side, regarding Income Tax.

    Reply
  14. Sadie Parker

    Justin is right. According to constitutional advocate friends of mine, that document says that income taxes are voluntary. There is no actual law that says we must pay income taxes. However, while the power of the IRS was reduced thanks to “Slick Willy” Clinton it has not been removed. Don’t mess with this organization. They can and they will take everything you have, arrest you and put you in jail for not filing, assess you with penalties going back to the beginning of time and basically ruin your life. Your best bet is to pay (taking advantage of every loop hole possible) or going offshore (not the safest bet anymore).

    A friend of mine’s husband died, leaving her with no clue that he never bothered to pay taxes on their joint income of several hundred thousand dollars. They were wealthy (mansion in Pasadena, CA wealthy) but she and her children ended up living in a friend’s garage for 2 years while she dealt with the vultures at the IRS. This was pre-Clinton. Now the burden of proof is on the IRS to show you are a criminal (and that they even have the right person!) but if they get you, they can go back to infinity and sock you with penalties and fees you never dreamed of. If you catch them at the right moment, they might work with you and give you a payment plan (a virtual lifetime sentence) but in fairness, they are trying to improve their image by trying to work things out with people…..to their advantage, of course.

    Bottom line? Pay, or change your name and move to another country. I’m guessing Panama!

    Sorry for the rant. I hate that agency and their abuse of power.

    Reply
  15. Akili Kumasi

    Hello Eric:

    Thanks for the tax “tip” and I am looking forward to you revealing the big project you are working on.

    Akili

    Reply
  16. Rian Brooklyn

    Eric,
    I’m from the US, still trying to decide on a state of incorporation. I know it’s not difficult to do, but since my business is entirely online, there really is no reason to incorporate in a high tax state like California. Just curious what state you used. Of course Nevada is an option, but I also hear that Wyoming and Delaware have even some more advantages. Do you know of any state that is particularly “nice” to say, Internet marketers? If I could afford an offshore company, I’d do that, but in the mean time I’ll play nice and set my first Inc or LLC in the US.

    Reply
  17. Rian Brooklyn

    I am aware of the voluntary clause in the IRS code to pay taxes. To my understanding, this applies to
    “personal income tax”, such as that of a laborer. If you run your own business though, that’s an entirely different scenario and you are legally required to pay taxes. The whole issue is covered at length in an excellent documentary called “America: Freedom to Faciscm”. It’s still a little scary to think about what would happen if you didnt pay your taxes as a laborer, even though the movie claims that over 16 million American’s don’t file a tax return due to this “voluntary” clause.

    Reply
  18. David

    My hat is off to both Eric and Paul!

    This was an EXCELLENT presentation! A few things that would be good to hear in a bit more detail would be:

    – What constitutes ‘active’ vs. ‘passive’ activities
    – Since a web site is located on a server somewhere and the business is literally international in scope, is there any particular “nexus” for the business that owns web-based sources of income? In other words, does it matter where the business entity(s) owned by the IRA are actually set up, eg., Nevada or Delaware vs. the same state as the IRA?
    – The IRA may not be able to have any debt, but can’t it own entities that involved debt? IOW, your IRA can buy a Corp that holds a parcel of real estate with a mortgage on it, right? (There are a lot of perfectly valid investment vehicles that sell debt and hold paper.)
    – Yow you may be able to shield some of these issues by adding additional layers of business entities

    Reply
  19. Abel

    This is really the right and important information to hear and have. Its just the real stuff! Thanks Eric for the tip.

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *