When audited, your success depends on presenting a reasonable case for your deductions. The speaker notes that auditors are generally reasonable. Success comes from clear documentation and plausible justifications, while overly aggressive claims are likely to be rejected.
Instead of viewing a year with low profits as a negative, business owners can use it to convert traditional IRA funds to a Roth IRA. This allows them to pay taxes on the conversion at their current low rate, ensuring all future growth and withdrawals are tax-free.
Paying your children through your business can create tax savings. The key is to document their actual work, even if they are very young. The speaker successfully defended paying his four-year-old by citing shredding, envelope stuffing, and even "marketing" at preschool.
Instead of a flat salary, employers can structure compensation for remote workers to include a dedicated, non-taxable reimbursement for office expenses. For a $100k employee, this might look like an $85k salary plus a $15k tax-free reimbursement, reducing the employee's tax burden.
For business owners with high income and few or no employees, a defined benefit pension plan can offer significantly larger tax deductions than standard retirement plans like a 401(k), potentially allowing for write-offs exceeding half a million dollars.
Structuring your business as an S corporation becomes tax-advantageous once income surpasses $100-150k. This allows you to pay yourself a "reasonable salary" subject to payroll taxes, while the remaining profit can be taken as a distribution, which is not subject to Social Security taxes.