Worksheet: Plug Your Financial Leaks to Keep More of What You Make

Bucket #1: Which of the following are missing from your financial team? (Check all that apply)

Bucket #2: Your Deductions

1. My main advice to you is avoid getting a tax refund because a refund means you gave the government an interest free loan.
2. Change your exemptions so you can keep more of your money along the way, which means you can either pay off loans, invest it or simply enjoy it, versus letting the government hold on to it.
3. To keep yourself from being surprised with a tax bill, every time you get paid make it a habit to set aside money in a savings account.

Bucket 3: Reclassifying Your Income

If you are a W2 employee, this bucket does not apply to you at the moment. If you think you’ll own a business in the future, revisit this lesson when you have started your business.

The following reflections are for Entrepreneurs or Owners of Commercial Buildings:

Bucket #1: Which of the following are missing from your financial team?

Bucket #2: Your Deductions

1. every time you spend money, ask the question: “Could this be connected to my business?” If so, document every transaction!
2. every three months (90 days), proactively meet with your tax team

Bucket 3: Reclassifying Your Income

1. Move your income from active to passive for tax purposes by taking a distribution rather than a salary.
   • Active income: W2 Income
   • Passive Income: Non W2 Income and can include Capital Gains
   • Distributions: An amount of money paid regularly (often quarterly) by a company to its shareholders.
2. Move ordinary income to capital gains
   • Captive Insurance
   • Holding capital gain assets
3. Tax Free:
   • Donor Advised Funds
   • Charitable Remainder Trusts
4. Tax Arbitrage: spend a dollar get more than a dollar back through:
   • Art Investments
   • Conservation Easements
   • Historic Easements
   • Opportunity Zones

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