Tax Planning Framework

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"

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): CategoryCommon MissesTypical SavingsHome OfficeSimplified vs actual method$1,500-$5,000/yrVehicleMileage log vs actual expenses$2,000-$8,000/yrRetirementSEP-IRA/Solo 401k contributions$10,000-$66,000/yr (tax-deferred)Health InsuranceSelf-employed deduction$3,000-$15,000/yrEquipmentSection 179 / Annual Investment AllowanceUp to $1,160,000 (US) / £1M (UK)R&D CreditsQualified research expenses6-20% of eligible spendMeals & Entertainment50% deductible (business meals)$1,000-$5,000/yrEducationBusiness-related training, conferences$2,000-$10,000/yrSoftware & SaaSAll business tools, subscriptions$1,000-$20,000/yrProfessional ServicesLegal, accounting, consulting feesFully 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." 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. Calculate your AI automation ROI: AI Revenue Calculator | Set up your AI agent: Agent Setup Wizard Bundles: Playbook $27 | Pick 3 $97 | All 10 $197 | Everything $247