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Avoid Lawsuits and Save Thousands in Taxes, Part II
By: Larry Oxenham
Posted: July 27, 2012, from the August 2012 issue of Skin Inc. magazine.
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Maximize medical deductions. Within a sole proprietorship or an S corporation, there is a limit on the medical expenses you can deduct. With the right provisions in a C corporation, you can deduct all medical insurance premiums and all out-of-pocket medical expenses.
Minimize Social Security and Medicare taxes. For sole proprietors, all profit—up to the taxable maximum—is subject to Social Security and Medicare taxes. In an S corporation, profits are distributed through a K-1 and are not subject to Social Security and Medicare taxes. Having your profits flow to you as K-1 income, instead of as profit from a sole proprietorship, could save you thousands each year.
Up to 50% of your estate could be lost to probate costs and taxes if you do not have an effective estate plan. Some attorneys recommend their clients create a will instead of a living trust so the estate will go through probate. Why? Because the attorney wants to collect the legal fees associated with probate and, in some states, the attorney receives a percentage of all the assets that go through probate.
The solution to this is to organize an effective estate plan. By utilizing a few legal documents, you can set up your succession plan, avoid probate and eliminate or dramatically reduce your estate taxes. The revocable living trust is the centerpiece of an effective estate plan. Setting up and funding a living trust enables you to effectively pass your assets to your heirs and is one of the most loving things you can do for your family.
Larry Oxenham, an American Society for Asset Protection senior legal advisor, works with the nation’s top asset protection experts, and has helped thousands of clients in all 50 states achieve financial peace of mind by properly structuring their assets for tax reduction, lawsuit protection and estate planning.