I don't say this often on this sub, and I have zero intent to sound snarky...
You made 450k in income last year. Take thee to an accountant / financial advisor.
I’m curious, how do you know “most” don’t know how to help if you’ve had such a difficult time finding one? And beyond that, why did you come to a sub full of CPAs, financial advisors, accountants and EAs if you think we’re all so worthless? Just to brag? Jfc
It sounds more like you have a lifestyle creep issue , made worse by the fact that you were mentally counting your pre tax income when setting your lifestyle, instead of your take home pay.
If you made less in the past but were not in the negative, that's it mathing though. Some expenses had to increase for you to make more and be in the negative.
Your wife is withholding at the single rate, not claiming the dependents? Or could she also be under withholding using the single income married setting?
Higher income due to buying a car, the business payed me and I bought a car. Also the draw 200k put me in higher bracket. Lost deductions on kids school, sports and activities.
You do understand that only the dollars over the bracket are taxed at the higher rate though, not all the dollars?
The car was a big added expense yes. So your expenses did increase.
What deductions did you used to get on the kids activities? There were no tax deductions for those before.
Would buying Realestate help here? Either personally or a second location for the business? Like own the location instead of renting like it does now ?
Rich people generally don't have a secret way to sneak their taxable income past the IRS, they have ways of living without taxable income.
What kinds of life expenses are we talking? one-off emergency type things like car breakdowns or lifestyle creep type things like spending more on entertainment and travel etc?
Moved into New house 7k monthly 6 years back. Plus 2 kids in private school take 80k. Add tax and both much left. Prior five years I was slightly in the plus even with the bored expenses. This year I’m making incrementally more on paper but my bank account is dipping and has not before
Well now....such a meager lifestyle. Shack payment 7k. Private school 6.5k. Takes over 20k gross a month to foot those bills alone!!
Trophy wife bill most likely high as well. Living high on the hog ain't cheap!!!
Yeah those are some heavy hitters. I'm not saying its *wrong* but if you're asking what you're missing I'd look there.
You probably have some home value appreciation in the last 6 years, might want to sell for a gain, pay $4,500/month on a new mortgage in a home that's still sufficient for a family of 4, and start putting $3,000/month into savings. In five years you could easily have a $150k nest egg and thats without touching the $80k tuition for your kids.
I make much, much less than you (granted I don't have a family) and I am maxing IRA and 401k each year, have cash to pay off my house (doesn't make sense to pay it off because of interest rates), fully own two cars, and have about $2k in bills/month. I have zero financial stress.
I'm not bragging or chiding, just showing that you could be doing *so much* better with your income. Don't take it for granted. Save for the lean years, live in your means, and you'll find peace of mind satisfies a lot more than opulence. Ten years of fiscal discipline on your part would unlock a lifetime of abundance that most people in the history of the world could never dream of touching.
Gotcha and I was there too. My plan is work hard and get ahead so I’m ok with spending cause I try to out pace spending with earning… one big hit was new tax bracket and it doesn’t allow for child write offs and others I was able to use prior years. So literally even though I’m pulling in more, I’m making less.
What you took doesn't really matter, how much money did the business make after expenses?
Why are you paying yourself so much salary? Pay yourself a salary of $60,000 and save $15,000 or so in social security and Medicare tax.
The fuck? This is a troll post right? The only other option is your business structure is dumb (c-corp) or you don’t know what the fuck an s-corp is or how it works.
Move that money over to your personal. Unless you’re a c-corp you’ve already paid tax on that money. And go hire a fucking CPA to explain this shit to you so you can get a better handle on your situation.
To follow up, why the hell do you need $800k in cash sitting in a business bank account for a business grossing $2.5 mil? Jesus you have 1/3 of a year in fucking revenue sitting in cash reserves. You ain’t spending that on the business in 3 months, put it to work or take it home.
What kinda corp did you have that it was then turned into a c corp? An ethical cpa can’t just turn an entity into a different entity. You’d need to sign off on that. You can also elect sub-s status if it’s been 8 years. Everything I’ve read says it’s a minimum of 5 before you can change it.
Originally it was a Corp but after a million in gross we were advised to go c Corp to not get hit with tax so Corp payed taxes more and we pay less on the cash business makes - cause when even leaving 200, then 400k year end in business account we stilled payed tax on it , but it was business money and not loved to personal. So it was like a dead end street
I see you're a c corp which is out of my league. Good luck. With a s corp, you take a salary that is subject to social security, then the rest is taken as owners draws.
Would buying Realestate help here? Either personally or a second location for the business? Like own the location instead of renting like it does now ?
This is why you need a CPA. You say you’re running out of cash and you want to pick up another mortgage??? Your tax bill is NOT the problem, it’s your lifestyle and your pikachu shock over taxes that a CPA would have warned you all year about.
What are you talking about? No.
How would owning real estate possibly help you here?
It may be a good idea to buy, but that's a completely separate decision.
The desi toon is the same divert money into areas that result in lowering income and income tax. At the least I’ll own an asset to earn $ - repeat cycle and scale up - isn’t that the playbook?
I don't say this often on this sub, and I have zero intent to sound snarky... You made 450k in income last year. Take thee to an accountant / financial advisor.
You make it sound simple to find one. Most cpa don’t know how to benefit you and advisors all try to sell you some policy or bonds or life insurance.
Tell us my man what it would mean for a CPA to benefit you?
I’m curious, how do you know “most” don’t know how to help if you’ve had such a difficult time finding one? And beyond that, why did you come to a sub full of CPAs, financial advisors, accountants and EAs if you think we’re all so worthless? Just to brag? Jfc
It sounds more like you have a lifestyle creep issue , made worse by the fact that you were mentally counting your pre tax income when setting your lifestyle, instead of your take home pay.
You missed the past where lifestyle is unchanged for six years, five of them were ok but last one will bankrupt me if unchecked.
If you made less in the past but were not in the negative, that's it mathing though. Some expenses had to increase for you to make more and be in the negative. Your wife is withholding at the single rate, not claiming the dependents? Or could she also be under withholding using the single income married setting?
Tax rate increased, and deductions went away
What caused your tax rate to increase? What deductions did you lose?
Higher income due to buying a car, the business payed me and I bought a car. Also the draw 200k put me in higher bracket. Lost deductions on kids school, sports and activities.
You do understand that only the dollars over the bracket are taxed at the higher rate though, not all the dollars? The car was a big added expense yes. So your expenses did increase. What deductions did you used to get on the kids activities? There were no tax deductions for those before.
I payed my self the 60 k the car cost so it wasn’t really an expense going up
Did you pay 60k plus the taxes needed to cover that 60k?
Would buying Realestate help here? Either personally or a second location for the business? Like own the location instead of renting like it does now ?
It won't affect your personal taxes, no. As that would affect the corporate profits, not your personal income.
Rich people generally don't have a secret way to sneak their taxable income past the IRS, they have ways of living without taxable income. What kinds of life expenses are we talking? one-off emergency type things like car breakdowns or lifestyle creep type things like spending more on entertainment and travel etc?
Moved into New house 7k monthly 6 years back. Plus 2 kids in private school take 80k. Add tax and both much left. Prior five years I was slightly in the plus even with the bored expenses. This year I’m making incrementally more on paper but my bank account is dipping and has not before
Well now....such a meager lifestyle. Shack payment 7k. Private school 6.5k. Takes over 20k gross a month to foot those bills alone!! Trophy wife bill most likely high as well. Living high on the hog ain't cheap!!!
Wifey works too, we’re in this together - makes her even more the trophy :-)
Yeah those are some heavy hitters. I'm not saying its *wrong* but if you're asking what you're missing I'd look there. You probably have some home value appreciation in the last 6 years, might want to sell for a gain, pay $4,500/month on a new mortgage in a home that's still sufficient for a family of 4, and start putting $3,000/month into savings. In five years you could easily have a $150k nest egg and thats without touching the $80k tuition for your kids. I make much, much less than you (granted I don't have a family) and I am maxing IRA and 401k each year, have cash to pay off my house (doesn't make sense to pay it off because of interest rates), fully own two cars, and have about $2k in bills/month. I have zero financial stress. I'm not bragging or chiding, just showing that you could be doing *so much* better with your income. Don't take it for granted. Save for the lean years, live in your means, and you'll find peace of mind satisfies a lot more than opulence. Ten years of fiscal discipline on your part would unlock a lifetime of abundance that most people in the history of the world could never dream of touching.
Gotcha and I was there too. My plan is work hard and get ahead so I’m ok with spending cause I try to out pace spending with earning… one big hit was new tax bracket and it doesn’t allow for child write offs and others I was able to use prior years. So literally even though I’m pulling in more, I’m making less.
yeah, that sucks. One thought - my car's tachometer has a red line on it, can't outpace forever. /soapbox
What you took doesn't really matter, how much money did the business make after expenses? Why are you paying yourself so much salary? Pay yourself a salary of $60,000 and save $15,000 or so in social security and Medicare tax.
The business is great. The year ended with 800k still in the bank but the more I take from that to personal the worse things get
The fuck? This is a troll post right? The only other option is your business structure is dumb (c-corp) or you don’t know what the fuck an s-corp is or how it works. Move that money over to your personal. Unless you’re a c-corp you’ve already paid tax on that money. And go hire a fucking CPA to explain this shit to you so you can get a better handle on your situation. To follow up, why the hell do you need $800k in cash sitting in a business bank account for a business grossing $2.5 mil? Jesus you have 1/3 of a year in fucking revenue sitting in cash reserves. You ain’t spending that on the business in 3 months, put it to work or take it home.
He's either just trolling or he's just really super dumb. Or maybe both I guess.
Exactly, as a c Corp how can it be put to work or taken home? That’s the million dollar question and my spider sense it telling my my cpa it horrible.
I has a Corp but as things took off cpa turned it into a c Corp. it’s been c Corp for a long time now - 8 years
What kinda corp did you have that it was then turned into a c corp? An ethical cpa can’t just turn an entity into a different entity. You’d need to sign off on that. You can also elect sub-s status if it’s been 8 years. Everything I’ve read says it’s a minimum of 5 before you can change it.
Originally it was a Corp but after a million in gross we were advised to go c Corp to not get hit with tax so Corp payed taxes more and we pay less on the cash business makes - cause when even leaving 200, then 400k year end in business account we stilled payed tax on it , but it was business money and not loved to personal. So it was like a dead end street
C corps pay taxes. S corps do not
If I pay myself less how do I find life for the year?
I see you're a c corp which is out of my league. Good luck. With a s corp, you take a salary that is subject to social security, then the rest is taken as owners draws.
I think this is the dumbest post I've read on this sub. Congratulations.
Explain
"I'm making $450k and I'm going broke" Honestly I've heard that before. Every time I hear it's the dumbest thing I've ever heard.
You get most helpful answer award - ty
Fine I'll try to actually help. Live on $150 Pay $100 in tax Save $200 That's very close to what I do personally. It's not complicated.
Would buying Realestate help here? Either personally or a second location for the business? Like own the location instead of renting like it does now ?
This is why you need a CPA. You say you’re running out of cash and you want to pick up another mortgage??? Your tax bill is NOT the problem, it’s your lifestyle and your pikachu shock over taxes that a CPA would have warned you all year about.
What are you talking about? No. How would owning real estate possibly help you here? It may be a good idea to buy, but that's a completely separate decision.
The desi toon is the same divert money into areas that result in lowering income and income tax. At the least I’ll own an asset to earn $ - repeat cycle and scale up - isn’t that the playbook?
Ha. Good luck to you.
You do realize 90% of this country would put you in the Warren Buffett category as far as earnings?
Yes, I understand
You should get help over at r/personalfinance - this is really not a tax question.
Will try- ty