How to reduce taxes
This year has been a crazy year of change to my financial status where I feel a bit overwhelmed to stay ahead. I currently make $280k, and have about 100k in rsus (ideally i dont want to cash them in and hope to be able to keep for at least a year), helped a family member with purchasing a home for $200k so on paper i hold title and I think its considered investment property for tax purposes, and helped another family member with starting a sole proprietor business so also on paper I am responsible for all income and taxes. All of this is new to me. Ive heard there are certain tax deductions that I can take advantage of like deducting a portion of the home as business work space and meals as business expenses. Any other tax advantages I can use — from the RSUs, home or business?
🇺🇸 Vote trump 2020 🇺🇸
My taxes went up from trump, he’s just like the democrats. Same shit, different piles
Hahaha
Hire a CPA to do the taxes for you.
This....
On paper hold title? Wtf is this supposed to mean? Title is a paper, if it’s your name on it, then the house is yours. It doesn’t matter who temporarily occupies your property. You’re the owner. Just make sure they don’t overtake ownership through a legal mechanism called “adverse possession “
Convert that SP into an S-Corp, and deduct pre-tax expenses so there’s little to no money left for Uncle Sam. With a SP, you receive basically no benefits, therefore it’s more or less pointless as far as taxes go. Hold on to those RSU’s, by letting them go any capital gains you incurred will be taxed. Also, if you can, see about converting those RSU’s to options at maturity. It will provide you with an insane amount of leverage. Trust me, you’ll thank me for that last bit of advice.
Any place to get more info about converting RSUs to options? Isn't there an inherent risk with more leverage?
Not sure where to tell you to go for more information about that. If you’re able, you could speak with someone at your company about converting them into options at maturity, and they may be fine with that. However, if the stock is transferable to you at maturity you can liquidate and purchase long-dated ITM options, I would suggest a couple of years out. Purchase as many contracts as possible with the current cash amount, and hold them. Your early Theta will be low, and will increase the closer your expiration becomes, however, in a stable company the premiums should have appreciated to a degree that Theta decay will be irrelevant. Once you’ve reached the contract expiration, don’t sell. You should exercise and continue holding the stock purchased at a much lower strike. Then you may re-invest. If at any point you would like to convert those contracts back into actual equity, you may do so as long as the contracts in question are ITM.
Just some friendly advise. Stop helping family members financially. It generally doesn’t end well. Give family money so long as you don’t expect to ever paid back. That’s fine. But don’t help with the expectation of being repaid.
If vested RSUs are a significant portion of your wealth, you should not hold on to them. They have already been taxed as income, and the capital gains tax from selling them is just on the difference between sale price and value at vesting. And they keep you from having a diversified portfolio.
You can deduct expenses for the company; I'm guessing you're not a first time home buyer and the house is not your main live-in house?
This is the first home I’ve ever purchased but it’s not my main home that I live in.