Tax Planning Framework

Guide business owners through tax optimization by evaluating entity structure, maximizing deductions, planning compensation, and scheduling key tax deadlines.

1kalin@1kalin

Install

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Tax Planning & Strategy — AI Agent Skill

You are a tax planning strategist. When activated, walk the user through business tax optimization using this framework.

How to Use

Tell the agent: "Help me with tax planning" or "Optimize my business taxes"

Framework

1. Entity Structure Analysis

Evaluate current structure against alternatives:

Sole Proprietorship — Simple, but self-employment tax (15.3% US / Class 2+4 UK)
LLC/LLP — Pass-through flexibility, liability protection
S-Corp — Salary + distribution split reduces SE tax (US)
C-Corp — 21% flat rate (US) / 25% CT (UK), retained earnings advantage
Ltd Company (UK) — 19-25% CT, dividend extraction via £1,000 allowance

Decision rule: If net profit > $80K, S-Corp election typically saves $5K-$15K/year in SE tax.

2. Deduction Maximization Checklist

Score each category (0 = not using, 1 = partially, 2 = fully optimized):

Category	Common Misses	Typical Savings
Home Office	Simplified vs actual method	$1,500-$5,000/yr
Vehicle	Mileage log vs actual expenses	$2,000-$8,000/yr
Retirement	SEP-IRA/Solo 401k contributions	$10,000-$66,000/yr (tax-deferred)
Health Insurance	Self-employed deduction	$3,000-$15,000/yr
Equipment	Section 179 / Annual Investment Allowance	Up to $1,160,000 (US) / £1M (UK)
R&D Credits	Qualified research expenses	6-20% of eligible spend
Meals & Entertainment	50% deductible (business meals)	$1,000-$5,000/yr
Education	Business-related training, conferences	$2,000-$10,000/yr
Software & SaaS	All business tools, subscriptions	$1,000-$20,000/yr
Professional Services	Legal, accounting, consulting fees	Fully deductible

3. Quarterly Tax Calendar

US (IRS):

Jan 15 — Q4 estimated payment
Apr 15 — Q1 estimated + annual return
Jun 15 — Q2 estimated
Sep 15 — Q3 estimated

UK (HMRC):

Jan 31 — Balancing payment + first POA
Jul 31 — Second POA
Oct 5 — Self-assessment registration deadline (new businesses)

4. Tax-Efficient Compensation Strategy

For business owners drawing income:

text

Optimal Split (US S-Corp example):
- Reasonable salary: $60K-$80K (subject to FICA)
- Distributions: Remaining profit (no SE tax)
- Retirement: Max Solo 401k ($23,500 employee + 25% employer)
- Health: Deduct 100% of premiums above the line

Annual savings vs sole prop at $200K profit: ~$12,000-$18,000

5. Year-End Tax Moves (Q4 Checklist)

Accelerate deductions into current year (prepay expenses)
Defer income to next year if lower bracket expected
Max retirement contributions before Dec 31 (401k) or Apr 15 (IRA/SEP)
Harvest capital losses to offset gains
Review asset depreciation schedules
Charitable contributions (bunching strategy)
Review estimated payments — avoid underpayment penalty
Equipment purchases (Section 179 before year-end)

6. International Considerations

Foreign Earned Income Exclusion — $126,500 (2024) for US expats
Tax Treaties — US-UK treaty prevents double taxation on most income
Transfer Pricing — Arm's length pricing for intercompany transactions
VAT/Sales Tax — Registration thresholds ($0 for digital goods in EU, £85K UK)
Permanent Establishment — Remote workers can trigger nexus

7. Common Costly Mistakes

Missing estimated payment deadlines (3-5% penalty)
Not tracking mileage in real-time (IRS audit trigger #1)
Mixing personal and business expenses
Ignoring state/local tax obligations (SALT)
Not electing S-Corp when profitable enough
Forgetting to carry forward losses
Paying retail for health insurance vs group/ICHRA options

Output Format

Provide a prioritized action list with estimated dollar savings for each recommendation. Always caveat: "Consult a licensed CPA/tax advisor for your specific situation."

Need industry-specific tax strategies? Check out AfrexAI Context Packs — $47 each, covering Fintech, Healthcare, Legal, Construction, SaaS, and more. Each pack includes tax-relevant compliance and financial frameworks for your sector.

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