Hi all tax wizards out there,
I'm running a lucrative "hobby business" (doesn't take up that much time) while working on projects of my choice. I plan on keeping it going for another few years and then it might "retire".
I try to optimize the business income and benefits into various forms of retirement savings.
The setup I currently have;
- My wife and I each take a salary based on 75% of a full time salary for a sales manager in our state (based on the states unemployment statistics - we are in a low wage state)
- We contribute our entire salary to solo 401k's (maxed out at $24k per year/person. No fed/state tax on that, only SS + Medicare)
- The company contributes 25% of our contributions to the solo 401k's. That makes it a total just over $30k per person.
- The company pays for a high deductible health insurance for us. Need to declare this as income but it's deductible above the line.
- The company pays for an HSA of $6.5k/year/person that we invested via HSA Bank.
- In case of medical expenses, we just keep the receipts as an IOU from the HSA accounts in case we need the draw the money.
- In addition we have our share of benefits from various subscriptions/services, mileage for car use, business travels that sometimes are extended for leisure.
- We each take a small distribution monthly to live on and the balance of the profit is distributed and taxed at the end of the year.
The question is if we are maxed out or it there is anything we overlooked? Our CPA isn't very creative. Most of the arrangements we have are based on our own web research - not suggestions from the tax pro!
Any suggestions are welcome...
To clarify; we have no additional employees or owners otherwise some of the arrangement above wouldn't work. Some of the amounts above is "catch up amounts" since we are old folks (55+)
