How an Active Trader Cut His Tax Bill by $142,674 and Funded $117,250 in Annual Retirement Contributions
An active trader walked in paying $634,114 in annual tax with zero retirement savings. Four coordinated moves cut his tax bill to $491,440 (saving $142,674 per year) and built $117,250 of annual retirement contributions where there had been none. The moves: Trader Tax Status election with §475(f) mark-to-market, an S-corp structure with salary optimization, formalized spousal employment for retirement contribution stacking, and a Massachusetts PTET election. This is the long-form companion to our published case study.
Tax Benefits of Hiring Family Members: When the Strategy Works (and When It Doesn’t)
Hiring family members in your business is one of the cleanest tax strategies the IRC allows. Pay your child up to the standard deduction (16,100 for 2026) and they owe no federal income tax. Pay your spouse and you open Solo 401(k) and benefit contribution room. The strategy works for every entity type, but the mechanics shift, FICA is exempt for kids under 18 only when the business is a sole prop or partnership of both parents. The catch isn’t the strategy. It’s the documentation.
C-Corporation Tax Benefits: When the 21% Flat Rate Actually Saves You Money
A C-corporation pays a flat 21% federal tax on profits, regardless of income level. For some owners, that beats the individual brackets they’d pay through an S-corp or LLC, especially when retaining earnings for reinvestment, planning a future sale (QSBS §1202 exclusion up to $15M), or running an SSTB above the QBI phaseout. The right strategy is often layering a C-corp onto an existing S-corp, not replacing it.
How to Avoid the Most Common S-Corporation Reasonable Compensation Mistakes
The five most common S-corp reasonable compensation mistakes cost owners more than they save. Taking too low a salary triggers IRS audits (Watson v. Commissioner cost a CPA tens of thousands in back FICA), caps your Solo 401(k) and defined-benefit contribution room permanently, and can cut your QBI deduction in half. Document a methodology using the IRS 9-factor framework and review it annually.
LLC, S-Corp, or C-Corp How to Know Which Entity Structure Your Business Has Outgrown
Choosing a business entity is not a one-time decision. It is an ongoing architectural choice that should be revisited every time your profit jumps materially. The structure that protected you at $100,000 is actively working against you at $500,000. We walk through the full decision framework, including when a C-Corporation alongside your S-Corporation unlocks savings that a pass-through structure can never achieve.
How to Save Taxes with an S-Corporation What Most Business Owners Don’t Know
Everyone has heard the rule of thumb. Elect S-Corporation status once your profit hits a certain number. The problem is nobody can agree on what that number is, and the IRS does not care about your rule of thumb. We break down how the S-Corporation election actually works, why it saves taxes, when it does not, and what a real optimized strategy looks like using two real client tax plans with real numbers.