How To (LEGALLY) Never Pay Taxes - Do This Today

what's up everybody i'm just putting singh and today i want to talk about rich people and more particularly i want to talk about what rich people are good at because there are two things that rich people are good at rich people know how to make money and rich people know how to keep that money aka how not to give their money to the irs in taxes nbc news says that the richest americans pay almost no income taxes motley fool talks about how warren buffett one of the wealthiest investors in the world pays a lower tax rate than his secretary cnn covered how donald trump paid no money in taxes and then cnbc covered how trump said that he is smart for not paying taxes i don't know about you but i don't particularly enjoy paying taxes either like when i think of my favorite things to do like hiking and working out and eating some really good guacamole i don't see paying taxes anywhere on that list and if you enjoy paying taxes and you feel like you should be paying more money in taxes then by all means please go and do that i mean you can just go on to the treasury website and you can donate some more of your money to the treasury department that way if you're not paying enough money in taxes you can just donate this extra money to the government and the irs i'm an attorney i'm not your attorney but what i want to do today is i want to go over seven ways that you can legally keyword legally pay less money in taxes and maybe even not pay any money in taxes that way you can do what rich people do and keep more money in your pocket so let's start with number one but before we jump into that i need you to do me a quick favor and smash the thumbs up button below and if you haven't yet be sure to join my private discord i call it the guac talk community because as we all know extra guac is truly a symbol of extra wealth and in this community you can chat about all things minority mindset the stock market the real estate market the cryptocurrency market entrepreneurship and all things building wealth so if you want to check out my discord community you can join it for free by clicking that button in the description below the first thing you can do to no longer pay so much money in taxes is to stop earning money this is actually what wealthy people do see the irs taxes you based off of how much money you earned and so if you could show the irs that you didn't earn any money well then they can't tax you because you didn't earn any money if you only have one stream of income from your job this one's going to be harder for you to implement right now because what wealthy people do is they show the irs that they didn't earn any money what they do is they make money from their investments and their assets but they don't actually earn any money themselves because when you earn money from your job that money is automatically taxed if you own a business that makes a hundred thousand dollars you don't pay taxes on how much money you make you pay taxes on how much money you keep so if you make a hundred thousand dollars and then you spend all one hundred thousand dollars well you only have zero dollars worth of taxable income because you made a hundred thousand and you spent a hundred thousand dollars a couple of years ago my accountant calls me up and he says jaspreet we have a problem you have a big textbook coming unless you can go out and spend more money so i had to figure out how i could spend 300 000 in the most effective way possible in my business that way i'd have a smaller tax bill at the end of the year now if you have a business you don't want to just spend the money to spend it because then that's just like throwing the money in the garbage yeah you'd have to pay some of that money in taxes but it'd be better to spend some of the money in taxes and keep the rest of it than just taking all of that money and throwing it in the garbage so now what you're trying to do is you're trying to figure out how do you take this money spend it but grow with the business that way now your business is worth more money and it's going to make more money in the future that way you don't have to spend that money in taxes because if you don't spend that money then half of it is going to go to the irs but if you can spend that money and make more money in the future but now you're using that money to invest in yourself and make more money instead of giving it to the irs so spending on things like consultants and classes and advertising and marketing that way now i'm spending the money that way i don't have to pay as much money in taxes but i'm spending it in a way that's going to benefit the business in the long run that way i can make more money in the long run and this is the same reason why you see so many youtubers making so many videos at the end of the year because they're trying to capitalize on all the advertising revenue that companies are spending because at the end of the year october november and december this is when companies are looking at their books saying oh my god we have a big tax bill due let's spend as much money as we can in advertising and marketing that way we don't have to pay so much money in taxes that means they're paying more money to youtube to spend on advertising which means that youtubers are gonna make more money per video in october november and december because you have so many advertisers that are spending money and advertisements so youtubers are trying to capitalize on that and make as much money as possible towards the end of the year and then comes january february and march and now all these companies run out of money and they're not spending any money on advertisements and now youtubers are struggling to make any money in january february and march the second way that you can avoid not evade but legally avoid paying taxes is by using debt strategically elon musk really demonstrated how this works back in 2021 because he ran a twitter poll to his followers asking if he should sell his stock now while that seemed like a harmless tweet he actually had a hidden agenda behind that tweet elon musk doesn't pay any taxes and the reason why he doesn't pay any taxes is because of what i said in number one he doesn't earn any money he doesn't take a salary out of his company and because he doesn't earn any money he doesn't have to pay any taxes even though he's one of the wealthiest people in the world well back in 2012 elon musk was awarded something like 22 million stock options for tesla stock that he would receive in 2021 when he received these tesla stock options in 2021 that was the first time that he earned money in years and now he had to pay taxes on the money that he earned but he didn't have any money to pay these taxes that's why he ran this tweet poll because if he sold his stock now he has some income that he could use to now go out and pay his taxes at this point you might be wondering if he's one of the wealthiest people in the world who doesn't have any cash in his bank account how does he afford to eat and pay his mortgage thanks to the help of strategic debt elon musk is not surprisingly one of the largest shareholders of tesla and so when he starts getting his options or shares of tesla at six dollars a share and the price of tesla goes up to a thousand dollars a share he has a lot of money on paper because the share prices have gone up from six dollars to a thousand dollars now he doesn't actually get that money in his bank account unless he sells these shares but if he sells these shares then he has to pay taxes on these shares so what he does instead is he borrows against these shares he takes out debt if he has a million dollars worth of tesla stock he can go to the bank and say hey how about you give me a loan for half a million dollars and you can use my tesla stock as collateral he's essentially refinancing out of his tesla stock so now what happens is he has cash in his hand which is debt and now all he has to do is pay some money back plus interest now this works great especially when you're in environment with such low interest rates because now he can borrow money at three four five percent a year while his stock can grow by 10 a year so he's making a profit by borrowing this debt and he gets to borrow the debt tax free if you go out and borrow 250 000 to buy a home you don't have to pay taxes on the 250 000 that you get from the bank and if you go out and you finance another half a million dollars out of your home you put half a million dollars into your bank account but again you don't have to pay taxes on the debt that you get because this is money that you have to pay back it's not income that you're getting so when elon musk takes debt out against his tesla shares he gets this cash into his pocket debt free he can pay some of the money back and interest but the value of the stock keeps going up so he can just borrow more if he needs more money this is a strategy that a lot of wealthy people use where you own assets and then the value of your assets go up when they go up now you can borrow against your assets you take this debt which is now tax-free in your pocket and you can live off of this money you can spend this money you can live your life and now you have money in your pocket tax-free to spend when i sat down with robert kiyosaki the author of rich dad poor dad this is the strategy that he says that he used to become a billionaire on paper and it is a strategy that made him wealthy take a look the reason i pay no taxes is because i borrow money i'm a debtor the only way the economy and check this out i mean all you communists out there check this stuff out i am a billionaire in debt you know why because i get tax breaks for borrowing money and the reason i am so rich is because i'm in debt and my friend dave ramsey says live debt-free i'm going well you're an idiot i mean he's my friend but i say dave i liked it he says i know but most people can't handle debt i said i agree but that's why there's no financial education in schools because if you knew how to handle debt you wouldn't save that crappy dollar you have in your hand i'd rather i'd rather borrow the money tax free now it wouldn't feel right going to the third point without giving you a little bit of a warning because taking on more debt does come with more risk i mean anytime you take on debt it has risk but if you over leverage then it comes with more risk because we've seen that if you over leverage on anything whether it's stocks or real estate and then you start to see the value of the asset go down now you're underwater and i can really struggle so if you do go down this route of using debt as a way to live tax free just make sure that you're being cautious that you're not over leveraged and you know what you're doing the third thing that you can do to not pay taxes is to maximize your deductions and one of the easiest ways to do that is by hiring an accountant because your accountant's job is to do one thing find as many tax deductions as possible that way you can pay less money in taxes if you own your own business or you have a side hustle or you're an independent contractor now you have opened up the doors of tax deduction possibilities when you only earn your money from your job your financial statement looks something like this you earn money and then you pay taxes and then you can spend whatever is left but if you own a business or if you're a side hustler or your independent contractor now you have a different financial statement because now you earn just like before but then you can spend your money and then you only pay taxes on whatever is left things switch because of how you earn your money because the government and the irs want to incentivize you to invest in your growth and they incentivize you to go out and take a risk and start a side hustle and start a business because well it's risky and so you get rewarded with less taxes for example i use my cell phone on my computer and business so when i go out and i buy a cell phone and my computer this is a business expense because i need to use it in my business so i get to deduct it against my taxes my team and i went out for lunch today that was another tax deduction i just showed you an interview clip that i made with robert kiyosaki well in order for me to make that clip i had to fly out to scottsdale arizona the beautiful arizona in order to record that i needed to have a hotel room i needed to have food i needed to have a car all of those things were a tax deduction and along with that i got a trip to arizona see i make money and then i get to spend money on things like my cell phone my laptop my food and my trips and then after what's left that's what i pay taxes on i spend my money and then i pay taxes while most people earn money and then they pay their taxes and then that's when they go out and spend money on their cell phone or their computer or their food or their trips now of course all of these tax deductions have to be used in my business they have to be used to help grow the business and you don't always get to deduct a hundred percent of every dollar that you spend which is why you want to make sure you speak to a tax professional before you go out and do any of this but you can see how the tax code incentivizes you to go out and start your own side hustle and start your own business because you get the incentive with the tax code and this even goes to your car i hired a new accountant recently and he calls me up last week and he says just breathe what do you think about g wagons i'm like they're nice why he says well i think you should consider buying a g wagon because i think that we can get you a good tax deduction on your g wagon section 179 says that you can go out and buy business equipment and deduct it against your taxes but the reason why this is so different and unique right now in 2022 is that there's a special provision that says that until january 1st 2023 if you go and you buy a heavy car for your business that weighs over 6 000 pounds you can deduct 100 of that purchase price against your taxes this year typically the way it works with heavy machinery is you have to deduct a piece of it every single year for a number of years so if you go out and you bought a thirty thousand dollar car well you wouldn't be able to deduct all thirty thousand dollars this year you could only deduct a small piece of that and then you deduct it a little bit next year and the year after that and the year after that but now section 179 says that until the end of 2022 if you go out and buy a heavy car you can deduct all of it against your taxes now there are some limits and exceptions to this so again talk to a tax professional before you go out and do anything but what my accountant said is that yeah you don't need a g wagon to run your business but what we could potentially claim is that because you have a lifestyle brand it goes with a lifestyle so there is a claim that we can make that you as an influencer need a g-wagon to help you run your personal brand now personally i'm not going to go out and buy a g-wagon just for the tax purposes because again like i said before i don't want to just spend my money to spend it if i'm going to spend my money i want to do it in a way that's actually going to earn me a return and help me build my business and help the business earn more money over the long term but these are things that you're seeing people do and these are potential claims and deductions that you can make if you follow this system but the only way that you can do that is again if you own a business or if you're a side hustler or if you're an independent contractor the fourth thing that you can do is you can invest more aggressively now i've been talking about why you need to invest for so many reasons you need to invest to build wealth you should be investing to fight inflation but now i'm talking about why you need to invest to fight taxes investing is something anybody can do regardless of how you earn your money and it provides a tax break for everybody you don't need to be a millionaire a multi-millionaire a hundred thousand there in order to start getting tax breaks from investing in money but what you do have to do is you have to actually invest your money and you want to make sure you're investing your money the right way if you go out today and you buy a stock for a hundred dollars a share and then three months later it goes up to 200 a share and you sell well now you have made some money from your investment but you're not going to get any tax breaks because you sold your stock within less than a year and in the irs size that's not considered an investment an investment is something that you hold on to for longer than one year because if you hold on to something for longer than one year now you qualify for something called long-term capital gains rates capital gains rates long-term capital gains rates are a lower tax rate that you get when you invest your money and i mean actually invest your money for longer than a year if you're just trading your money meaning you're holding investments for less than a year you don't get those tax breaks now the money that you earn from your investments your investments that you hold on to less than a year are going to be taxed at the same tax rates that you would have gotten if you earned this money from a job if you work a job and let's say you make 40 000 a year from working a job you're gonna have to pay taxes on this money you're gonna have to pay federal taxes you're gonna have to pay state taxes you're gonna have to pay fica taxes and after all these taxes you'll be left with something around let's say two thousand dollars depending on where you live some states are going to tax you more some states are gonna tax you less but something around thirty two thousand dollars this is if you work a job now if you invest your money like i've been talking about and you earn 40 000 worth of profits so now you bought a stock you bought some real estate you bought an investment you held on to it for longer than a year and you sell it and you have a 40 000 profit well now you don't have to pay any long-term capital gains rates because you're under the threshold 40 000 is zero and then depending on where you live you might not have to pay any state taxes you don't have to pay any fica taxes which means at the end of all this you are left with forty thousand dollars forty thousand dollars is more than thirty two thousand dollars and the reason why you get to keep more is because you earned this money from your investments not from here if you make forty thousand dollars in your capital gains long-term capital gains your tax rate is zero and the highest tax rate in 2022 on long-term capital gains rates is 20 so if you make a million dollars for investments the most you're going to pay is 20 in taxes the fifth thing that you can do is you can earn money from real estate investments if you go out and you buy this home and you keep the numbers round and easy to understand let's assume that this home costs a hundred thousand dollars now again you're not buying this home to live in yourself you're buying it as an investment property so you're gonna rent it out to somebody else and let's assume that you can rent it out for a thousand dollars a month so if you can rent it out for a thousand dollars a month that's twelve thousand dollars a year in rental income but you don't get to keep i don't know what i'm doing here you don't get to keep all twelve thousand dollars you have expenses to pay so let's assume that a third of this money is going to expenses this is your taxes your insurance your maintenance costs your management fees so that costs you 33 percent so now you're gonna send in about four thousand dollars a year in your expenses which leaves you with eight thousand dollars of profit now if you go out and you get a mortgage to buy this property that means you're gonna have to finance eighty thousand dollars so you're gonna have to pay some of this money back to the bank so if you borrow 80 000 it's gonna cost you something around 400 or so a month so 400 or so a month is right around 5 000 a year which means now you have to subtract your 5 000 a year in your debt costs which leaves you with three thousand dollars in your pocket now you're gonna have to tell the irs that hey i made three thousand dollars of income and you're gonna have to pay taxes on this three thousand dollars worth of profit except you get another tax break as a real estate investor you get to tell the irs that hey my property is a little bit older and because my property is a little bit older i deserve a tax break even if the value of your property is going up so now you will get to tell the irs in this case that because your property is older you should get a 36 hundred dollar tax deduction this is only on your taxes which means that in your tax return you get to tell the irs that you made a whole negative six hundred dollars so you tell the irs that you made negative six hundred dollars when in actuality you put three thousand dollars in your pocket the technical reason why you get to do that is you get to deduct one for 27 and a half years the reason being because your home goes through wear and tear and you get to deduct that on your taxes and you get to deduct this even if the value of your property is going up so now you made three thousand dollars your bank account has three thousand dollars but you get to deduct this much of your property every single year in this case that's 3 600 assuming that's 100 000 is just the property there's no land included because you can't deduct the value of your land so now you are left on taxes on paper with a negative 600 income you pay taxes on negative six hundred dollars which means your tax bill is zero and the next time you have to pay taxes you'll be able to deduct the six hundred dollars of loss against that but you show the irs that you didn't make any money but in actuality you still have money in your pocket and it's completely legal this depreciation loophole is what allows people like donald trump to make a lot of money every single year from the real estate properties but pay nothing in taxes because you get to deduct the value of depreciation of the property while you're still earning money and then if the value of your property goes up to two hundred thousand dollars what you could do is you can just refinance out so now you can pull out another hundred thousand dollars and now you get this money in your pocket again tax-free remember we talked about earlier living off of debt that's again what real estate investors do when the value of the property goes up they borrow against it and now you have cash in your pocket tax free you can use this cash in your bank to go out and buy another property create more income get more tax deductions and have more money in your pocket while you're paying less money in taxes legally this as you can see is why financial education is so important the average person is not going to be able to take advantage of any of these tax breaks because they don't understand how money works and if you're thinking well what am i supposed to do all i do is work a job i don't have the ability to go out and buy some real estate as an investment i don't have the ability to go out and start a business but what you can do is first get financially educated that way you can start moving towards the right direction you don't have to go out and start a business to start getting these tax breaks you can start a side hustle which doesn't have to be a ton of work or a ton of time but it's something that you can start doing something that you can start implementing to earn some more money and capitalize on some of these tax breaks and if you want to invest in real estate it's something that you can do but you first have to set your mind to it i mean if you put a little bit of money aside every single month you will be able to work towards buying your first rental property and if you're thinking that you'll never be able to afford a property in your area well then you can look in places like the midwest because in the midwest you can find properties for around a hundred thousand dollars that will produce great cash flow but you have to understand the neighborhoods it takes time it takes effort but this is why financial education is so important because anybody can do it when you have the right mindset and you have the hustle but you need to know what to do the sixth thing that you can do involves the home that you live in yourself if you buy this home right here to live in yourself for 250 000 and you live in there for let's say 10 years and then the value of your home now goes up to 400 thousand dollars well what you could do is you can sell your home for four hundred thousand dollars and now you pocket this 150 000 and guess what there's 150 000 that you get from selling the home that you live in is tax free this is one of the most valuable tax deductions out there for the average person because if you own a home you can sell your home and you can profit up to 250 000 if you're an individual or 500 000 if you are a married person and this money that you put in your pocket is completely tax free that now you can put in your pocket you can go out and spend you can go out and use for a bigger home or you can use this money to invest in something else the key for this deduction to work is you have to live in this home as your primary residence for at least two years before you sell it so you can't just buy a home live in it for two months and sell it for a profit and get this tax break you have to live there for at least two years as your primary residence if you have questions about whether you qualify for this rule or not again talk to a tax professional because there are exclusions and the last thing that you want to do is to sell your home you make a hundred thousand dollar profit you go and spend this money and then you find out that you didn't actually qualify for this deduction and now you have a thirty thousand dollar tax bill so again talk to a tax professional and the seventh thing that you can do is sell your real estate investment so again let's assume that you bought this property as an investment property for a hundred thousand dollars you're making your cash flow you're getting your tax breaks on your deduction but you're making money every single year and now a few years go by and the value of a property goes up to let's just say 200 000 now if you sell your property you're gonna have a hundred thousand dollars worth of profit that you have to pay taxes on you don't get that same deduction here that you get with your primary residence but you have to pay taxes on this hundred thousand dollars worth of profit however if you take this new two hundred thousand dollars you take the hundred thousand dollars that you got from the money that you put in and you take the hundred thousand dollar profit and you go out and you buy a bigger property this might mean a bigger home a bigger investment property if you go out and invest all this money into a real estate investment and like kind exchange but now you get to defer all of these taxes you don't have to pay any taxes on this profit and now you own a bigger property which means you're going to be making more money you get a bigger tax deduction and now you get bigger cash flows and guess what but then you can double this property to 400 000 and then you do it all over again and you can do it again and again and again and again you go from four hundred thousand dollars to a million dollars a million to two million dollars two million to four million dollars and you can do this until you die i don't know why i made dying sounds so exciting but you can do this for your whole life meaning you can just defer the taxes again and again and again that way you never have to pay the taxes because you don't touch the principal you just keep letting the money grow then you flip it into a bigger property you let the money grow more you flip it into another property and the irs lets you not pay taxes on it when you do that if you do this exchange which is called the 1031 exchange 1031 the 1031 exchange lets you flip real estate property to real estate property without having to pay taxes on the sale this is one of the biggest tax breaks that wealthy people use to grow and compound their wealth tax free because now you can start investing in real estate and you can keep flipping the properties as property values go up so if you're investing in a good area where property prices are going up well now you can flip your properties again and again and again you're growing your wealth and you're doing it completely tax-free and while you're doing that you're also growing the amount of money that you're making every single year because when you flip into a bigger property you're getting more rent and that means you're also getting those bigger tax breaks the depreciation tax breaks that i was talking about so you keep increasing the amount of money you're making and you're increasing the value of your property and you can do it tax-free if you know what you're doing what's up everybody if you want to continue building your financial education i linked a relevant video here that i think you'll love and as an added bonus i have a free guide on how you can start generating passive income that you can download and read for free all you got to do is click that button below i couldn't i couldn't take the fact that i was always criticized in class

Channel: Minority Mindset

Views: 749,802

Keywords: minoritymindset, minority mindset, minority123, jaspreet singh, rethink rich, financial education, financial literacy, finances, stock market, stocks 101, how to invest, money management, investing 101, building wealth, how to manage money, financial advice, investing, buying stocks, housing market, inflation, wealth, passive income, personal finance, real estate, real estate 101, real estate investing, tax, taxes, pay less taxes, tax management

Id: 248o4zc9RmI

Length: 27min 34sec (1654 seconds)

Published: Thu Feb 03 2022