How to (LEGALLY) Pay $0 In Taxes | Why The Rich Don’t Pay Taxes?
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Channel: The Better Men Project
Views: 282,117
Rating: 4.9189897 out of 5
Keywords: How the rich avoid taxes, Robert Kyosaki, The Cashflow quadrant, tax loopholes the rich use, how the rich pay less taxes, tax strategies of the wealthy, tax breaks for the rich explained, how the rich pay no taxes explained, how does donald trump pay no taxes, how to legally pay no taxes, how to legally avoid taxes, how corporations work, should the rich pay more in taxes?, percentage of taxes paid by the 1 percent, How to get rich, things the rich do
Id: jv-rDR6lSFI
Channel Id: undefined
Length: 10min 15sec (615 seconds)
Published: Sun Oct 20 2019
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clothes as a business deduction lol
Any video that claims the rich don't pay taxes is one that you should take with a grain of salt. Often times even if the strategies that get mentioned are legitimate, the video fails to go into detail and explain the nuances/risks associated. Can you deduct travel expenses related to your business? Yes, but that doesn't mean you can add a business meeting to your personal vacation and get to deduct the entire cost of your vacation. There are limits and rules, which these videos always conveniently forget to mention.
They also never get into the financial side of these transactions. Spending more money to reduce your taxes is a losing battle, since you pay 100% of the expense, but only receive a tax decrease equal to your marginal tax rate. For example, if you are in the top tax rate of 37% and pay $10,000 of expenses, you will reduce your tax liability by $3,700. You spent $10,000 and received $3,700 for a net cash outflow of $6,300.
CPA here....cool video, but the title is misleading.
It's got some good info. Outdated a bit after the tax changes. A few things could be easily misunderstood (like the clothing statement) and it doesn't really address the standard deduction.
I don’t see this as rich vs poor. You could be an employee and rich or self employed and poor.
the answer is always maybe. you can be aggressive with your deductions as a business owner, but you better be willing to flush all those savings down the toilet when you have to hire an audit defense team. its sort of like gambling.
Private letter rulings are pretty ridiculous as well.
It's not a matter of rich vs poor. It's a matter of those who have the most / better abilities to exploit tax systems either legally or illegally. The real ways to "win" are to do illegal things, misreporting income, fraud in terms of expenses and so on and so on. Obviously they are illegal, and if you get caught your going to face serious fines or jail time. Tax evasion is a very serious thing that the IRS doesn't take lightly, yet people do it every day. Taking "clients" out to eat is the family itself going out to eat every night of the week, and claiming 100% of it to boot instead of the allowed 50% in legit cases. They effectively get a discount on the meal of whatever their tax rate would have been on the money be it 25%, 35% or more. But put it in proper terms. You didn't save any money, you just got to eat 7K worth of meals at restaurants and it "only" cost you 5K instead of 7K.
The sad reality is there are a lot of "borderline" ethical situations that would require a lot of "manpower" to catch so a lot of it slips through the cracks. John Doe Brick company made a million dollars and want to cut down their tax bill. Lets say the top 500K of that money would get taxed at 30% ( I have no idea how businesses get taxed). So the owner says well... my personal vehicle is 10 years old now, and my son is turning 16 soon and he will need a vehicle... and I can actually buy a "company" vehicle or two. So lets head on down to the BMW dealership and spend 400K. They get a 30% discount, plus probably another discount for buying so much at once (likely very small... maybe another 2 or 3%) and use the vehicles as personal vehicles. Most often this type of thing doesn't even get checked into. That and expenses for entertaining clients and on and on and on.
The poor on the other hand get EIC and pay 0% taxes on the majority of their income on top of it, plus probably child tax credit and everything else. They wind up with tax refunds equal to 50% or more of what they earned. Meanwhile the middle class folks get reamed out the worst. No EIC, no business loop holes, no assitance, and pay upwards of 22% in tax on the top part of their income (plus state and local tax).