tomevault-io 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:
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."
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Source: modbender/skill-library-mcp — distributed by TomeVault.