[Cam]

You can contribute any amount that you want, starting with $1.00 if you want. Your bank or credit union is a good place to start

Nah, I mean, what is the upper limit? How much income can you shelter?

[GMAN]

Rawlco, you can set up a S-corp and avoid the double taxation of a regular C-corp. You only have to pay Social Security Tax on earned income, such as a salary. If you have a corporation, you can pay yourself dividends instead of a salary and avoid the Social Security Tax. I have a friend who has been doing this for years. He owns several businesses and he does that with each business. You can also opt out of Social Security and avoid having to pay it, too. The down side is if you opt out, you can never collect any benefits from it. Of course, you could invest the 15% you would pay into Social Security and have a REAL retirement fund when you get ready to retire. :P

There are some costs involved in setting up and maintaining a corporation. In Tennessee it costs $100 to set up a corporation and a minimum annual tax of about $100, I believe. I am sure it is similar in most other states. You can set your own retirement program up in your corporation and shelter a lot of income.

[beachbum2]

CAM , yes your credit union can open your IRA. You can invest it in stocks and bonds, futures of all kinds or the simpliest and safest is a regular Certificate of deposit. This is insured 100% by the fed and has absolutely no risk. There are several kinds of IRA's and most DO have a limit on what you can contribute per year. Also you can contribute all at once, weekly or whenever you have a little extra money.

I personally prefer a ROTH IRA as the limits are higher and it is geared towards self employed folks like us. Ask one of the investment specalists at the credit union to explain and answer ALL your questions. The financial instutions are competing for our investment money as they can loan it to someone else and make money on it.

GMAN is right, there are zillions of tax shelters, and you don't have to be rich to take advantage of most of them. All it takes is a little research and patience. I earned a double degree in finance and accounting. However the laws change so much each year we always go in once per year for about an hour and talk to our banker. We work too hard for our money to give any more than we must to Uncle Sam.

The interest and taxes on your personal residence is 100% deductable too. If you own a rent house, or trailer ALL expenses are deductable and you can depreciate it out over 30 years too. Don't mean to sound like I know it all because I don't. Just trying to help.

[Rawlco]

Originally Posted by GMAN

Rawlco, you can set up a S-corp and avoid the double taxation of a regular C-corp. You only have to pay Social Security Tax on earned income, such as a salary. If you have a corporation, you can pay yourself dividends instead of a salary and avoid the Social Security Tax. I have a friend who has been doing this for years. He owns several businesses and he does that with each business.

Thank you GMAN. I had a momentary brain cramp when I was posting that before. I have an LLC where all the business income is distributed to the members and is taxed as self employment income, so there is no self employment tax avoidance that way.

You can also opt out of Social Security and avoid having to pay it, too. The down side is if you opt out, you can never collect any benefits from it. Of course, you could invest the 15% you would pay into Social Security and have a REAL retirement fund when you get ready to retire. :P

I believe that if you invest the same amount wisely you will have a lot more money than social security will ever amount to. For us young people there may not even be any social security in 40 years.

Originally Posted by Cam

Nah, I mean, what is the upper limit? How much income can you shelter?

Last year the maximum deductible amount for a traditional IRA was $4000 per person. For this year it may be more. There isn't a limit on how much you can contribute, just a limit on how much is deductible.

Roth IRA is after tax dollars so no contribution is tax deductible. I think there is some way around this for people over a certain age. The nice thing about Roth IRA contributions is that they earn interest TAX FREE. For example. This year you contribute $10,000 to a Roth IRA. In 20 years that $10,000 has earned $20,000 in interest (maybe) and you can take out the entire $30,000 when you are retired with no taxes due on any of it.

With a traditional IRA you contribute $4,000 without paying taxes on it BUT when you take it out in 20 years you owe taxes on that $4,000 AND all of the interest it earns.

[Cam]

I really appreciate it Rawlco and Beachbum. Out here I often hear guys bragging about paying no taxes. I have no idea what's going on there, if maybe they are liars or their wives take care of their finances and they are just ignorant. I'm not buying a house just yet but maybe I'll head over to the credit union when I get back in town and lower my taxable income a few thousand dollars. Curious what you guys are doing on this board...involved in trucking in some way?

[solo379]

Originally Posted by Cam

Out here I often hear guys bragging about paying no taxes.

9 out of 10(unless they leased to a Swift...etc ), those guys, are just taking chances, if they got audited.... :shock:
You've got to be reasonable... :wink:

[Rev.Vassago]

It all depends upon what sort of deductions you have, and how good your accountant is.

I didn't pay any taxes last year, but that was because I didn't own the truck for a full year, and I had some sizeable deductions.

[GMAN]

We all must pay taxes. The amount and type are what is in question. I hope I am not repeating myself, but earlier this year I had to go by my local IRS office to speak to them about something. I don't recall exactly how it came up or anything else that was said, but she made a statement which blew me away. She told me that it was a PRIVILEDGE to pay taxes! PRIVILEDGE? I informed her that it wasn't a privilege to pay taxes, but an OBLIGATION! We are all obligated to pay some taxes. That is the only way our government can function. It is the amount of taxes that I question. I also think it is our obligation to pay as little in taxes as possible. I say this after paying my 2290 last week and with the anticipation of working on some other tax things over the weekend. The 2290 is one of those useless taxes that.....well, never mind. I won't get started on that right now. The point is that we have deductions and opportunities to pay fewer taxes than these bureaucrats want from us. We should take advantage of every deduction possible. I don't know about the rest of you, but I pay far more taxes than I want. Every time I buy a gallon of fuel, groceries or most anything else, I pay taxes. :shock:

[beachbum2]

CAM, most of us own and drive a truck. I, like alot of others, have had "another life" and got tired of it. I have ran with a hospital administrator, several ex lawyers, lots of ex-corporate types that just got tired of the games. There are several drivers who were raised in the business and know how to run their company the right way.

This business can be a good career for a smart business person. Listen to the ones who make sense and sort thru the bs. There are lots of others who don't know their arse from a fifth wheel.

The main thing is to remember this...This is a BUSINESS. We need to make sound business decisions from which loads we run to how we spend or save our money. Forums like this one are helpful to me and others I'm sure because like I said. I don't know it all...but others can offer their experiences and keep me from making the same mistakes.

[Iceman]

We had an LLC until we dissolved it and sold our equipment. Our CPA wrote the first two years off as a loss. He also said that as long as we were paying "something", the IRS would leave us alone, and that we needed to keep our deductions in line with our income, which we did. Ask your accountant because you can write off a ton!

Iceman