Background A client operated a successful HVAC business for many years. The business generated approximately $300,000 in cash flow and was in a C-Corporation. Like many C-Corporations we come across, the prior “strategy” was to pay the profit out in W-2 wages to avoid double taxation, while overpaying FICA. The client was paying approximately $116,000 in income tax and FICA tax each year.
Fortunately, they called one of our Managing Directors at Redwood Tax Specialists!
The Plan The client wanted a 5-7 year exit strategy and is extremely conservative and wanted fixed/guaranteed options for any retirement balances. Based on the client’s preferences, cash flow needs, and budget, we designed their custom tax plan with:
The Results Combined Federal & State taxes were reduced from $116,000 per year to:
2016 – $83,026
2017 – $45,626
2018 – $11,027
In only three years, the client’s net worth increased by over $200,000, with zero investment risk, the client has a guaranteed lifetime retirement income benefit in excess of what they previously thought was unreachable. The client is in a position after only three years to retire comfortably, compared to their desired goal of 5-7 years that was unreachable under their previous plan, and the client has been taking the opportunity to travel the world with family, now that there is a clear path forward.
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James Washington, Managing Director, Redwood Tax Specialists
New Orleans, LA, Surrounding Areas and USA
There are fees associated with potential tax reduction solutions that are determined by size and level of plan complexity.