Convert wages to reimbursed expenses for outside salespeople - If employee has legitimate employee expenses i.e. auto travel that he has not been reimbursed for, currently that employee deducts it as a miscellaneous expense. At best the employee reduces his taxes due IRS by 35% of expenses incurred. Meaning the other 65% of money spent by the employee came out of his pocket. If the company paid those expenses, the employee would get 100% back in his pocket. The employer benefits by reducing his employer payroll taxes and workmen’s compensation insurance (costs determined by employee wages).
Ex. Reimburse employee $10,000 for auto travel instead of paying salary. Employer saves $765 in matching employer payroll taxes plus lower workmen’s comp.
Buy a Hummer - In order to write off the purchase of a new SUV (now limited to $25k plus bonus depreciation) it must weigh at least 6,000 pounds. A Hummer weighs 6,001 pounds.
leave a reply