First State CPAs and Associates

1 day ago

𝗪𝗵𝘆 𝘀𝗵𝗼𝘂𝗹𝗱 𝗜 𝘂𝘀𝗲 𝗮 𝟱𝟮𝟵 𝗽𝗹𝗮𝗻 𝗶𝗻𝘀𝘁𝗲𝗮𝗱 𝗼𝗳 𝗮 𝘀𝘁𝗮𝗻𝗱𝗮𝗿𝗱 𝗶𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁 𝗮𝗰𝗰𝗼𝘂𝗻𝘁 𝗳𝗼𝗿 𝗰𝗼𝗹𝗹𝗲𝗴𝗲 𝘀𝗮𝘃𝗶𝗻𝗴𝘀?

A 529 plan can protect your college savings from annual taxes on dividends and capital gains, with tax-free withdrawals for qualified education expenses.

In a standard brokerage account, dividends and realized capital gains can create a tax bill along the way. Those taxes leave less money in the account to keep growing.

A 529 plan handles your growth differently:
• You contribute money that has already been taxed, so there’s no federal deduction on your return.
• The money can grow without annual federal taxes on dividends or capital gains.
• Withdrawals are tax-free when you use them for qualified education expenses.

Depending on your state, you may also qualify for a state income tax deduction or credit when you contribute.

𝘋𝘰 𝘺𝘰𝘶 𝘤𝘶𝘳𝘳𝘦𝘯𝘵𝘭𝘺 𝘩𝘢𝘷𝘦 𝘢 529 𝘱𝘭𝘢𝘯 𝘴𝘦𝘵 𝘶𝘱 𝘧𝘰𝘳 𝘺𝘰𝘶𝘳 𝘬𝘪𝘥𝘴? ... See MoreSee Less

First State CPAs and Associates

2 days ago

𝗦𝗵𝗼𝘂𝗹𝗱 𝗜 𝗲𝗹𝗲𝗰𝘁 𝗦 𝗖𝗼𝗿𝗽𝗼𝗿𝗮𝘁𝗶𝗼𝗻 𝘀𝘁𝗮𝘁𝘂𝘀 𝗳𝗼𝗿 𝗺𝘆 𝗟𝗟𝗖?

An S corporation election could cut your tax bill by keeping part of your business profit from being subject to the 15.3% self-employment tax.

Under a default LLC, your net profit faces income tax plus the 15.3% self-employment tax.

When you elect S corp status, you split your earnings into two parts:
• A reasonable W-2 salary (subject to payroll taxes)
• Shareholder distributions (exempt from self-employment taxes)

Distributions bypass the 15.3% self-employment tax entirely, which drops your overall tax burden.

Now, running an S corp does come with extra administrative tasks like payroll software, bookkeeping overhead, and corporate return fees.

But once your annual net profit crosses roughly $60,000, your tax savings outpace those extra costs, putting more money back into your business.

𝘏𝘢𝘷𝘦 𝘺𝘰𝘶 𝘭𝘰𝘰𝘬𝘦𝘥 𝘪𝘯𝘵𝘰 𝘢𝘯 𝘚 𝘤𝘰𝘳𝘱𝘰𝘳𝘢𝘵𝘪𝘰𝘯 𝘦𝘭𝘦𝘤𝘵𝘪𝘰𝘯 𝘧𝘰𝘳 𝘺𝘰𝘶𝘳 𝘓𝘓𝘊? ... See MoreSee Less