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
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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