Life Management
CSIA
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9
a federal tax rate of 15% on 
the first $50,000 of taxable 
income. Your corporation 
can retain these earnings so 
you are not double taxed. If 
you had a personal marginal 
federal income tax rate of 
28% and a state income tax 
rate of 7%, you would pay 
$17,500 in federal and state 
income tax on this $50,000. 
If, however, this $50,000 
flowed to a Nevada C 
corporation, you may only pay 
the federal corporate tax rate 
of 15% (depending on the 
activity of the corporation), or 
$7,500, saving you $10,000 in 
taxes. 
Another application of this 
strategy is to spread income 
to children in lower tax 
brackets. Instead of paying 
your children’s expenses 
directly with after-tax dollars, 
hire your children and pay 
them for the work they do 
and have your children pay 
for their own clothes, food, 
school, etc. from the money 
they earn. You can deduct 
the wages as a business 
expense, and your children 
will pay taxes at their lower 
tax bracket.
Strategy #3 - Maximize 
Deductions
There are thousands of items 
that are allowed as business 
expenses. You want to make 
sure as many expenses 
as possible are deducted 
as business expenses. 
Expenses you may not be 
taking full advantage of as 
a business deduction are 
your medical expenses. 
Within a sole proprietorship 
or an S corporation, there 
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continued on pg.10

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