How can I lower my taxable income

Question

I recently bought a house in August that I will be flipping. I am looking at making around 90K to 80K before taxes. This will most likely put me in the 24% tax bracket but I am close enough to falling into the 22% tax bracket if i can some how figure out a way to lower my taxable income. I am looking to use the proceeds of the flip to pay off a vehicle which should help with my DTI as well as my HELOC so I can do another investment. my overall goal is to pay down my debt and get some rental properties for passive income. I was wondering if anyone knew of a way I can lower my taxable income though write-offs or by starting a business? any help will be greatly appreciated.

Thanks,

Jeff

Thanks,

Jeff

Ashish Acharya · Answer

Not matter how you invest the money(Start a business or pay the debt), the profit is taxable. Unless you put money in the retirement plans such as SEP or solo 401k, it will be fully taxable.

Running the activity via S-corp might also save you some money. Saving is more pronounced if you already have w-2 job.

Also, falling in 24% bracket doesn’t mean that your entire income is subject to that percentage. It is graduated rate, if you are on the edge, most of the income is taxed at the lower rate and spill over are taxed at marginal rate.

Carl Fischer · Answer

@Jeff Higgins

Your asking after the fact. Set up a meeting with @Ashish Acharya or  another “planning” accountant and get this figured out before you make the profit. Get your tax efficient plan in place and then focus on making all the money you can.  Make as much of that money tax free as you can.