Now, whether this is intentional or not, there are several loopholes in the tax code that business owners can legally use to move their income around to reduce their taxes.

The Biggest Tax Loopholes Business Owners Should Be Taking Advantage Of CPA EXPLAINS AUGUSTA RULE Business Owners Tax-Deductible Rental Fee Tax Exempt PAYING YOURSELF $20K Non-Deductible Reditches $20K TAX DEDUCTIONS $0 TAX OWED Cornell Law School LII Legal Information Institute 26 U.S. Code § 280A - Disallowance of certain expenses in connection with business use of home, rental of vacation homes, etc. U.S. Code Notes prev next (a) GENERAL RULE Except as otherwise provided in this section, in the case of a taxpayer who is an individual or an S corporation, no deduction otherwise allowable under this chapter shall be allowed with respect to the use of a dwelling unit which is used by the taxpayer during the taxable year as a residence. CPA EXPLAINS IRS File Pay Refunds Credits & Deductions Forms Report Fraud Businesses and self-employed Small business Family employees Individuals Business tax account Employer ID numbers Business taxes Business structures Operating in business CPA EXPLAINS ONE BIG BEAUTIFUL BILL ACT TAX-FREE REIMBURSEMENT PLANS Medical Reimbursement Plans REIMBURSE FOR OUT-OF-POCKET MEDICAL EXPENSES Dependent Care Assistance Plans REIMBURSE FOR CHILDCARE Accountable Plans REIMBURSE FOR BUSINESS EXPENSES PER BUSINESS CPA EXPLAINS See Table 2-1 for an overview of the employment tax treatment of these benefits. Table 2-1. Special Rules for Various Types of Fringe Benefits (For more information, see the full discussion in this section.) Treatment Under Employment Taxes Type of fringe benefit Income tax withholding Social Security and Medicare (including Additional Medicare Tax when wages are paid in excess of $200,000) Federal unemployment (FUTA) Accident and health benefits Exempt (except 2% shareholder-employees of S-corporations) Exempt Exempt Achievement awards Exempt Exempt up to $1,600 for qualified plan awards ($400 for nonqualified awards) Taxable Adoption assistance Exempt Taxable Taxable Reimbursement services Exempt if substantially all use during the calendar year is by employees, their spouses, and their dependent children, and the facility is operated by the employer on its premises. Taxable Taxable CPA EXPLAINS