Birmingham, AL · Member since 2013 · 35 posts · 8 votes
I am an investor who is in a higher tax bracket. I am working with a tax attorney who is advising me to form a C corp. I can do my flips and wholesales through the C corp and lower my effective tax rate. I know you can get money back to yourself from a C corp through HSAs, insurance, and so forth. Are there any attorneys, CPAs, or other knowledgable individuals on Bigger Pockets who can suggest some ideas as to how I can get cash I earn from flips back to myself from a C corp and avoid double taxation? I am not eligible for an HSA. My tax attorney has suggested that I really can't in most circumstances , but I can loan money to other entities I have (LLCs that hold rentals) and help myself.
I am an investor who is in a higher tax bracket. I am working with a tax attorney who is advising me to form a C corp. I can do my flips and wholesales through the C corp and lower my effective tax rate. I know you can get money back to yourself from a C corp through HSAs, insurance, and so forth. Are there any attorneys, CPAs, or other knowledgable individuals on Bigger Pockets who can suggest some ideas as to how I can get cash I earn from flips back to myself from a C corp and avoid double taxation? I am not eligible for an HSA. My tax attorney has suggested that I really can't in most circumstances , but I can loan money to other entities I have (LLCs that hold rentals) and help myself.
Jimmy
Loaning your principal is the best way initially, after that you will want to utlize salary to family members who can do work including your kids, use it to fund Roth IRAs for them. You also can issue dividends, which should be a lower rate when done correctly. There does come a fine line where you should have just used an S-corp. When you factor in Fed and state tax on income of the corp, plus Fed and state tax on Qualified dividends paid out..... You may have just considered using the S-corp. It is only usefull if you plan to almost never use the money except for benefits, build up the accumulated earnings and then hopefully draw a small personal income one year to do a large cash out. Or gift he equity to your kids over time. You and your spouse can gift 28k between the two of you to each kid.
Also, do you max out your 401k contributions? Have you considered retirement accounts for your kids?
Personally, I'd suggest asking your attorney about Family Limited Partnerships and trusts.