A large number of business owners have avoided the many benefits the government has offered in these trying times. The large number of choices has led to a perfect example of people’s behavior when confronted with too many choices. Even tax professionals are struggling to understanding all the different programs. Alvin Toffler’s overchoice is clearly hampering small business owners. Too many options reduces the number of businesses that will apply for any, even if they qualify. That is the biggest risk facing the American economy in 2020. If business owners shy away from programs designed to help them through these unique times more will fail, costing jobs and long-term damage to the economy and harming America’s competitiveness.
I encourage you to discuss your situation with a competent tax professional. Yes, the IRS is still playing with the rules because they haven’t figured it all out yet themselves. But you can still plan accordingly. Whether a PPP loan or the Employee Retention Credit is best for you, you owe it to your employees, community and yourself to explore all the options.
The best opportunities in the tax code are not found in the book. Today I am going to show you how to game the Earned Income Credit (EIC) legally in a way you have never heard before. I know most readers on this blog have an income in the six figures and higher. The example I illustrate today is geared toward families with an income of $100,000 or less. Even if your income is higher you want to stick around. What I show here exposes the way I think about taxes and how I use the tax code to save my clients massive quantities of money.
The EIC has a history of fraud. Because of this the IRS watches tax returns with the EIC closely for fraud. You guys are not at risk of IRS scrutiny because you are not going to commit fraud. Right? Good. The program I outline below does not require cheating to ramp up your available tax credits. No fake income or expenses are required. We will do this all above board for everyone to see. The IRS will bless your tax return for its accuracy.
The EIC is meant to help poor families, but the credit extends all the way to $50,597 for a married couple with two children in 2017. Our example below will use this family unit to illustrate the tax benefits. When we are done you will know how to collect the EIC even if your wage income is over $80,000, or even a bit higher!