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Understanding Taxes: Tips and Strategies for Minimization · Earn Your Leisure

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  Speaker 1: I want people to also think about what are the
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  Speaker 1: things that you have to do or the investments that
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  Speaker 1: you have to make in order to help you, you know,
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  Speaker 1: live tax free. The same thing goes with investment in
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  Speaker 1: the stock market. It's passive, it has a lower tax rate.
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  Speaker 1: So even if you put your money, if you made
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  Speaker 1: the exact same money in the stock market that you
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  Speaker 1: made in W two income, you would be paying like
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  Speaker 1: a much lower tax rate. Like I just told you guys,
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  Speaker 1: somebody could have a gain. A married couple would have
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  Speaker 1: a gain in the stock market, a ninety thousand dollars,
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  Speaker 1: they would have to pay zero taxes. Well, if they
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  Speaker 1: had a if they made W two income, they would
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  Speaker 1: be looking at on the federal side alone, about twenty five.
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  Speaker 2: Percent in taxes.
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  Speaker 1: Right, that's not including state right, Like me live in
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  Speaker 1: New York City, right local. Right, So now you have
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  Speaker 1: all of these different taxes, and you know it can
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  Speaker 1: be pricey. So when we're talking about reducing taxes, I
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  Speaker 1: want us to talk about like the flow and really
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  Speaker 1: understanding that we have to look at everything. So before
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  Speaker 1: we start talking about business owners, let's just quickly talk
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  Speaker 1: about what tax deductions are there for individuals. And then
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  Speaker 1: we'll go on to being a business owner, because honestly,
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  Speaker 1: being starting a business is a tax strategy for people
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  Speaker 1: that have W two income, right. And when I say
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  Speaker 1: starting a business, that could be you know, starting a
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  Speaker 1: business that can be invested in real estate. But you
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  Speaker 1: have to do something, right, I always say, if you
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  Speaker 1: want to kind of change your tax situation, you got
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  Speaker 1: to change what's happening, right, You got to change your
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  Speaker 1: facts and what's actually being put down on paper if
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  Speaker 1: you want to make that change. So let's talk tax
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  Speaker 1: minimization as it relates to individuals. Right, So you can
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  Speaker 1: do things like invest in in thissible bonds, long term
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  Speaker 1: capital gains.
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  Speaker 2: So I like to list long term capital gains.
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  Speaker 1: Because a lot of people that are that are looking
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  Speaker 1: for a way to say, hey, well how can I
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  Speaker 1: take my income and generate additional income and not have
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  Speaker 1: to pay as much taxes. So again we talked about this,
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  Speaker 1: you know a good amount already just investing that is
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  Speaker 1: one way that can be done starting a business. So
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  Speaker 1: we'll talk about that on the next what we'll continue
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  Speaker 1: to talk about that, just like being a business owner
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  Speaker 1: and how you can shift a lot of those expenses
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  Speaker 1: that you guys are paying with after tax dollars and
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  Speaker 1: shift it up into your business.
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  Speaker 2: So now it's a tax adoption. Right.
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  Speaker 1: There's major power in that maxing out your retirement plans.
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  Speaker 1: So most people are not actually maxing out their retirement
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  Speaker 1: plans at work that is done with before tax dollars.
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  Speaker 1: So if that's done with before tax dollars, go ahead
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  Speaker 1: invest in your retirement plan. So therefore you're able to
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  Speaker 1: get to maximize all your money and take advantage of
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  Speaker 1: that compound interest. So employee benefits, HSA accounts, and then
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  Speaker 1: your tax credits, right, so you earn income credit, you
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  Speaker 1: American Opportunity Credit, child and Child and Dependent Care credits,
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  Speaker 1: so all of those are credits. One credit that I
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  Speaker 1: did not well. One really good deduction that I didn't
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  Speaker 1: put up here, which I just thought about because we
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  Speaker 1: were talking about real estate, is the homestead exemption credit
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  Speaker 1: for real for all of my individuals that are selling
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  Speaker 1: their property. Right, so I talked about ten thirty one exchange.
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  Speaker 1: A really good one for individuals when they sell is
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  Speaker 1: they are able to exempt up to two hundred and
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  Speaker 1: fifty thousand dollars of a capital game if you're single, right,
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  Speaker 1: if you're married, you get to exempt up to five
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  Speaker 1: hundred thousand.
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  Speaker 2: So I've had clients.
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  Speaker 1: In so many different scenarios where there was one client
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  Speaker 1: she literally sold, she helped, she had a property. Eleven
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  Speaker 1: and a half months she sold the property and I'm like, no, no, sorry,
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  Speaker 1: it was a year. Sorry it wasn't ye, it was
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  Speaker 1: one year and eleven month. Eleven and a half months.
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  Speaker 1: And the exemption, I mean, the credit says that if
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  Speaker 1: you live in this home two out of the five
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  Speaker 1: years that you that you've owned it, that you get
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  Speaker 1: to exempt this two hundred and fifty thousand dollars. And
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  Speaker 1: so I was like, oh my god, why didn't you
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  Speaker 1: pull us? Because now what happens is because she sold
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  Speaker 1: it before the two years, now she can't. Right now
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  Speaker 1: she can't take advantage of the credit. But has she
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  Speaker 1: just known and held on to it for freaking fifty months? Yeah, yeah,
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  Speaker 1: she's two months away? Yeah dang, yeah, no, actually she
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  Speaker 1: was fifteen days she was. It was one year and
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  Speaker 1: eleven months. She only needed to hold on to it
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  Speaker 1: for two years, so she would have been she would
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  Speaker 1: have been exempt from taxes, you know. So it's like
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  Speaker 1: knowing things like that is really important because again, you're
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  Speaker 1: giving away money.
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  Speaker 2: Be offended, like be I want people to get offended.
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  Speaker 1: I always say, if I came to you and said, listen,
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  Speaker 1: I want twenty percent of your house sales, sell your
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  Speaker 1: house and it give me twenty percent, you be highly offended.
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  Speaker 2: You probably want to punch me right like you would
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  Speaker 2: be highly offended.
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  Speaker 1: But when it comes to taxes, people don't understand it,
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  Speaker 1: so they just be like, Okay, I'm gonna just pay it,
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  Speaker 1: but I want you. I want you guys to get
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  Speaker 1: offended and really do whatever you feel that you can
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  Speaker 1: do to minimize your taxes, which is just have the
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  Speaker 1: conversation right with with your CPA or your accountant. And
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  Speaker 1: if you can't have that conversation with them, then that
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  Speaker 1: means that you need to fire them, right, because then
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  Speaker 1: that means that they're not for you anymore. All right.
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  Speaker 3: So yeah, so we're gonna we're gonna get into different
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  Speaker 3: type of tax deductions in detail. First, everybody hit the
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  Speaker 3: like button and share please, about to get deep into it,
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  Speaker 3: but let's go over just the actual brackets if we can,
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  Speaker 3: before we go into the different type of strategy.
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  Speaker 2: Yeah.
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  Speaker 1: So brackets are important, right, brackets are important because when
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  Speaker 1: you fall into a particular bracket, that is going to
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  Speaker 1: determine the amount of taxes that you are going to pay. Right, So,
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  Speaker 1: earlier I talked a lot about Hey, well you know,
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  Speaker 1: if you had a couple that were that was investing
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  Speaker 1: in the stock market, and if they were invested in
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  Speaker 1: the stock market, then they would be able to you know,
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  Speaker 1: take a you know this, sorry, they would be able
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  Speaker 1: to make ninety thousand dollars an income and pay zero taxes.
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  Speaker 1: But if you have that same person that was like married,
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  Speaker 1: right they they what are we looking at? Okay, well
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  Speaker 1: we're looking at twelve percent right in taxes. So I
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  Speaker 1: want you guys just to understand, as I mentioned, the
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  Speaker 1: harder you work, the harder you the more taxes you
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  Speaker 1: are going to pay. So at the top, what you
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  Speaker 1: see under earn income this these are this is my
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  Speaker 1: W two earners. This is my business owners right that
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  Speaker 1: are that have LLCs, that has s corporations, partnerships.
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  Speaker 2: This is your tax bracket. Okay.
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  Speaker 1: So it can be as low as ten percent and
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  Speaker 1: it can be as high as thirty seven percent. What
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  Speaker 1: you have below is your investment income. So your investment
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  Speaker 1: income can be as low as zero percent, right, and
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  Speaker 1: then it can go as high as twenty percent. I
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  Speaker 1: want you guys to realize. Do you realize that no
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  Speaker 1: point is your earned income not taxed at all?
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  Speaker 2: Do you see that it starts out at ten percent?
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  Speaker 1: That's it from zero to eleven, Like it's gonna start
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  Speaker 1: out at ten percent. So I want you guys to
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  Speaker 1: just really really understand, like you know what this really means.
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  Speaker 1: And then I want to highlight the corporate tax rate,
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  Speaker 1: because I know I spoke a lot just about the
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  Speaker 1: you know, the corporate tax rate and it being much lower.
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  Speaker 2: So somebody may, you know, look at this and be like, Okay,
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  Speaker 2: well I'm not going to be at LLC. I'm going
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  Speaker 2: to be a corporation. But you have to just hold on.
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  Speaker 1: Let's talk about corporations and how they're tax So corporation,
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  Speaker 1: the business itself does pay twenty one percent in taxes,
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  Speaker 1: so they do, they do pay twenty one percent in taxes.
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  Speaker 1: But what happens is a corporation deals with what's called
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  Speaker 1: double taxation. Right, So every person that invest in the stop,
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  Speaker 1: what happens they invest in this stop the company, Let's
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  Speaker 1: just say they invest in Apple. Apple files their corporate
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  Speaker 1: tax return and Apple pays taxes. Right, so Apple pays taxes.
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  Speaker 1: Then what happens is they send you dividends. And what
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  Speaker 1: happens when they send you a dibdend you gotta pay
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  Speaker 1: taxes on it.
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  Speaker 2: Unlucky, reinvest it.
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  Speaker 1: You can reinvest it, However, you have to pay taxes
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  Speaker 1: on the dividends that they send you. Right, they're going
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  Speaker 1: to send you your form. They're going to send you
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  Speaker 1: have to file your the dividend income that you received
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  Speaker 1: from this business.
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  Speaker 2: So that's what's called double taxation.
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  Speaker 1: So you as a shareholder, right, you have to pay taxes,
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  Speaker 1: and then Apple had to pay taxes.
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  Speaker 2: So that's why.
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  Speaker 1: Ultimately just forming a C corporation may not be the
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  Speaker 1: best idea because now you're paying twenty one on the
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  Speaker 1: corporate side, and now it's just you and the business.
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  Speaker 1: You are the shareholder, So now that then goes over
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  Speaker 1: to you. So now you you know you're looking at
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  Speaker 1: an additional twenty percent on the dividend income.