How to Avoid Taxes Legally like a Pro

i'm going to provide you with 17 tax tips on how to avoid taxes legally my name is brian kemp i'm a certified public accountant and i'm the owner of multiple tax practices so i started off my tax career helping the little guys and then i work my way up to helping the ultra rich with their taxes the goal of this video is to explain to you how to avoid taxes legally and here are my prepared remarks so i'm crafting this video to be exactly what you need to know if you're making thirty thousand dollars to three hundred thousand dollars once you're making over the three hundred thousand dollar mark you can utilize a few more tax tricks but if you're making more than 300 grand all of these things that we're going to cover they're still going to be applicable to you you would just be building on top of these fundamentals so once you get over the one million dollar mark so that's when things start to get really wacky with a lot of gray areas but we're not going to get into that in this video so welcome to this video on how to avoid taxes legally so i want to manage your expectations so that we're on the same page before we begin so there is no magic bullet so there's no secret tax hack that's going to magically reduce your taxes to zero so that option if you're looking for that option that option is only going to be available to billionaires with complex offshore business entities so if you're not a billionaire and you want to miraculously just make your taxes go to zero without the offshore entities and without the army of tax attorneys if you want to go if if you want to achieve that then you're going to have to go down the illegal route so how to avoid taxes illegally if that's what you're looking for that you're at the wrong video you clicked on the video that says how to avoid taxes legally so in this video i'm going to show you how to do it legit i'm going to show you how to do it clean how to do it right so that you can save money on your taxes and sleep well at night and i'm not going to say things like go buy a house so that you can deduct mortgage interest or go to college so that you can deduct the tuition tax credit so i'm going to give you practical and relevant guidance and let's begin so we're going to start with the easy ones these are things so these are your low-hanging fruits so these are things that you can do at your job so i'm talking about your tax benefits that you can opt for at work so starting with number one you can utilize the pre-tax commuter benefits at your job so for 2022 you can spend up to 280 a month tax-free on commuting so this is basically a 280 tax deduction every month commuter benefits they're going to allow you to pay for your commuting expenses with pre-tax dollars so this is going to be applicable to mass transit such as trains subways buses ride sharing such as uber or lyft parking meters parking garages parking lots so this is going to get adjusted for inflation each year in 2021 it was 270 a month and it got bumped up to 280 a month in 2022 number two you can utilize your retirement plans at work so this is most commonly gonna be the 401k or the 403 b so you can take a portion of your paycheck and you could put it into your retirement accounts the 401k or the 403b a 401k that's going to be if you're at a for-profit company and a 403 b that's going to be if you're going to if you're working at a governmental if you're working at a governmental job or a not-for-profit organization when you put money into your retirement accounts you're going to be decreasing your taxable income so it's going to have the same effect as a tax deduction when you put money into your 401k you're going to be lowering your taxes and building up your retirement accounts so i made a separate video solely focusing on the 401k it's extremely in depth and i go over the good and also the bad of the 401k so i'll leave a link to that video up here so you can put away a significant amount of money into your 401k or your 403b so we're talking about dollars 20 2022 and an additional six thousand five hundred dollars if you're 50 years old or older the maximum contribution limit it gets adjusted for inflation each year so expect the maximum contribution limit to increase every year moving on to number three you can put money into an hsa and hsa is a health savings account so just think of this as a savings account for your health related expenses when you put money into your health savings account you're going to get a tax deduction so it's going to be built into your w-2 if you're going to be doing this through your work if you use the money in your health savings accounts for qualified medical expenses then you're not going to pay taxes on that money so you're going to get a tax deduction when the money goes into your hsa and you're not going to pay taxes on that money when you use it so on top of that you can invest the money in the hsa and the earnings and the interest they're going to grow tax-free they will be tax-free also if you use them on qualified medical expenses however hsas they're going to be for people that have high deductible health plans if you do not have a high deductible health plan then you can opt to go with the fsa for your medical expenses and fsa that's going to be a flexible spending account where you can use pre-tax money to pay for your medical expenses but you need to watch out because there's going to be a use it or lose it rule for the fsa if you don't use all the money in your fsa by the end of the year you're going to end up losing it unless your company has a rollover option but even if they have that there's going to be limitations in general if you're young and healthy with few prescriptions or medical conditions then you're most likely going to be better off with an hsa but this is where your health and your preferences they're going to come into play so this is going to be a personal decision that's going to be best for you to decide moving on to the dependent care fsa so you can pay for your child care expenses with pre-tax money so you can do this for your children and adult dependents who are incapable of caring for themselves so you can use your pre-tax money to pay for daycare nurseries preschool nannies au pairs babysitters day camps after school programs adult day care facilities etc now let's move on to investments and we're going to cover the most common investments first of all if you have cryptocurrency losses make sure that you report them because capital losses are tax deductions you can utilize your crypto losses to offset your capital gains in the stock market or offset your ordinary income so if you have cryptocurrency losses and you made money in the stock market then you can use your crypto losses to wash and offset against the money that you made in the stock market and it could be vice versa you can use your losses from the stock market to offset against your crypto gains additionally at the end of the year you can sell your losing positions in order to claim the losses as a tax deduction so this is known as tax loss harvesting so just don't repurchase the same stock within 30 days otherwise you're not going to be able to claim the tax deduction because that's known as the wash sale rule and take advantage of the long-term capital gains tax rates so if you hold on to a stock or a crypto for more than a year and then you sell it for a gain then that's going to be classified as a long-term capital gain and that you're going to receive so much better tax treatments if you're interested in long-term capital gains i'll leave a link to my video on that topic up here with long-term capital gains you're generally going to pay half the taxes so the half the tax rate compared to ordinary income or short-term capital gains and there's also a zero percent so there's a zero percent long-term capital gains tax rate so a lot of people they're not familiar with this so you should know this basically if you're single and you make approximately 52 000 a year or under your long-term capital gains they're going to be tax-free so there's no catch there's zero tax non-taxable 100 tax-free at least at the federal level if you're married filing jointly and you make under approximately one hundred six thousand dollars combined your long-term capital gains are going to be tax-free so people are gonna say that the threshold it's forty thousand four hundred dollars and eighty thousand eight hundred dollars for 2021 not fifty two thousand dollars and a hundred and six thousand dollars but those people they're forgetting about the standard deduction so take these zero percent long-term capital gains into consideration because it could be tax-free money and make a big difference but please be mindful of your state taxes if applicable because we're talking about again just the federal taxes and i urge you so i'm i'm telling you that please you need to read your 1099b tax document that's what the brokerage you know sends you at the end of the year usually in february for your taxes so please check your 1099b to see that it does not contain errors so at least gloss over it and make sure that certain transactions they don't look obviously incorrect so the biggest thing that i see is when the cost basis it's missing in the transaction so that could end up costing you a lot of money in taxes i'm talking thousands of dollars and i see this all the time if the cost basis if it shows up as zero by accident which again i see this all the time that's gonna look like that you purchase the stock or the crypto for zero dollars and then whatever you sell it for it's gonna look like it was pure profit so if you if you bought something a stock or crypt if you bought it for a hundred dollars and you sold it for a hundred dollars a lot of times with it within a lot of the transactions it's gonna say the cost basis which is your purchase price it's going to say zero it's going to be blank that data for whatever reason it was just missing and it just appears on your tax document as a zero if that's the case so if you bought it for 100 sold it for 100 you made no money but if there's an error and it's blank then it's gonna look like you bought it for zero because it's blank and then you sold it for a hundred and then it's gonna look like you made a hundred bucks in that case you're gonna pay taxes on something that you should not be you should not be paying taxes on so that's going to artificially inflate your taxable income and you're going to end up paying more taxes so please fix that which you can fix and don't let that happen to you so when new clients come in you know i have to amend for them i have to do amendments i have to amend for them all the time just so many times and i save them thousands of dollars every time it just it's one of the usual suspects so please watch out for that look over your 1099b and please do not forget to deduct your margin interest so this is going to be listed on your 1099b your tax documents you can deduct your investment interest expense for stocks and cryptos and here's a random one that's it's actually going to be useful because i'm seeing this with more frequency so if you went to the casino and you hit a jackpot on the slot machine and then so an employee they're going to go out to you and they're going to issue you a w-2g and that's going to be a tax form just saying that you won and receive the money along with your payouts so we're not talking about a million dollar jackpot we're talking i mean this could be applicable for just a few thousand dollars i mean that's a great hit but still just a few thousand dollars you're going to get issued a w-2g so you're going to receive that tax form the w-2g and the irs they're going to have a copy of that as well so if you don't report that then you're going to get in trouble if you get a w2g please write that off so unless unless you literally just did one pull and you won and that you never gambled for the rest of the year before or after but if that's not the case if you lost money before or after on table games slots sports betting horse racing you name it use those losses to deduct against the w2g so don't let them tax you like that so please be advised that you can only use your gambling losses up to the extent of your gambling winnings now let's move on to other plans that you can utilize so if you're going to be using the 401k or the 403b at work but if you want to put away even more money for retirement then you could put money into your ira so this video it's about tax reduction so we're going to skip over the roth ira in this conversation so depending on your income your spouse's situation and whether you get offered a retirement plan at work you may be entitled to more tax deductions for putting money into your traditional ira another plan that you can utilize is the 529 plan and this is going to be for education you can use this for your child's education you can use this for your own higher education you can use this for anyone else's education so you're not going to receive a federal tax deduction for putting money into the 529 plan but you could receive a state tax deduction so some states they're not going to offer you a state income tax deduction for putting money into the 529 and of course some states they don't even have state income taxes but even in those cases you're still going to receive the benefit of tax-free growth and tax-free compounding growth but if you can put away money for your child's education and get a state income tax deduction of course please check with your state then that's a pretty good deal and i'm going to throw this one out there because i see so many people wasting money with the irs and the states if you're used to owing money when you complete your taxes in a lot of cases you're getting hit with an underpayment penalty and you don't even realize it so the penalty it's actually listed on your tax return and it automatically adds to your taxes owed so to stop this from happening you're going to have to fix how much money that you have withheld from your paycheck for taxes which you can do by adjusting your w-4 payroll settings so i made a video on how to properly fill out the w-4 and i'll leave that link up above and if you want to make some tax-free income from renting out your place you can rent out your home for 14 days or less and all the money that you make by doing so is going to be 100 tax-free income so this is called the minimal rental use rule and now that we have so many americans just moving around with the capability of working from home you can always move to estates with zero state income tax the states with no income taxes include texas florida nevada alaska washington south dakota tennessee and wyoming new hampshire they're going to join the party in 2027 and of course please do not overlook your tax deductions and your tax credits to lower your taxable income and reduce your taxes which include charitable donations the earned income tax credit student loan interest mortgage interest property taxes pmi electric vehicle tax credits and so on so i hope that this information is helpful to you and gives you guidance on how to pay less taxes to the government please subscribe and i thank you so much for all your support and i wish you an excellent day

Channel: ClearValue Tax

Views: 163,680

Keywords: how to avoid taxes legally, How to avoid taxes legally, how to avoid taxes, tax, taxes, IRS, tax deductions, tax writeoffs, tax write offs, tax write-offs, tax writeoff, tax deduction, tax credit, tax credits, how to legally avoid tax, how to legally avoid taxes, how to avoid tax legally, how to avoid tax, how do the rich avoid taxes legally, how do the rich avoid taxes, how do the rich avoid tax, taxes 2022, taxes 2021, IRS taxes, IRS tax, tax tips, tax tricks, tax advice

Id: 5kXdPT7Ev4s

Length: 16min 23sec (983 seconds)

Published: Fri Jan 28 2022