Secret Hacks The Top 1% Use To Pay Less Tax
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- Опубликовано: 13 мар 2023
- Secret hacks the top 1% use to pay less tax.
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Warren Buffet is widely regarded as the greatest investor the world has ever seen, and is currently sitting at number 5 on the Forbes rich list with a net worth of over $100 billion. You can only imagine the amount of money this man brings home every year. Now I want to ask you a question. Considering that the average single worker in the US pays close to 23% in tax every year, how much tax do you think Warren Buffet pays? 30%, 40%, 50%. No, he pays 1%...except he doesn’t, he actually pays 0.1%. That’s right. Buffet shocked the world and in the process angered social justice warriors when he announced that he was in fact paying less in taxes than his own secretary. That is, on a percentage basis at least. And this isn’t an anomaly amongst the world’s richest people. Jeff Bezos, founder of Amazon pays 0.98% in taxes, Mark Zuckerburg, founder of Meta pays 1.1%, Elon Musk, the richest man in the world, pays just 3.27% in tax, and then…there’s you.
You’re probably working a job right now. At the start of each year, your employer mails you your tax statement, and without question, you go through the motions of copying that information over to your 1099 tax form. You send it off to the government thinking, why is 28% of my income lost to taxes? Why do the rich pay so little tax? How are people making more money than me paying less tax? This isn’t fair. You come to the conclusion that the tax game is rigged. You have to be rich enough to hire world-class accountants to save money on taxes. There is no way a normal person like myself can reduce their tax liability.
But what if I told you, you were wrong? There are ways that you can pay less tax and save more money each year, all within the legal confines of the tax code. Today I’m revealing the legal tax secrets the wealthy commonly use to reduce their tax burden, and by the end of the video, you’ll know how to do the same.
Topics Covered:
Personal finance, how to save money, how to build wealth, how to make money, entrepreneurship, financial freedom, investing for beginners, taxes explained, how to legally avoid taxes, tax hacks, how to get rich, how to minimize taxes, tax writeoffs, taxes 2023, tax advice.
DISCLAIMER: Some of the links on this page are affiliate links. I may earn a commission if you click through and make a purchase and/or subscribe. Affiliate commissions help fund videos like this one.
Everything in this video is of my own opinion and could be wrong. I am not a financial adviser. These videos are for educational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. I am merely sharing my opinion with no guarantee of gains or losses on investments.
Hope you all find this useful! Have a great rest of your day :)
Start following you I love you 😅
Very nice. ❤
As a tax accountant these are all correct but for most people who are making income only from W-2 wages you can not offset "side-hustle" expenses above "side-hustle" income and cannot deduct from that base W-2 income. Meaning you arent going to get you W-2 income taxable percentage anywhere near the single digits like the rich like you alluded to. Great video and spot on but dont want people to misunderstand that part given you went through the details pretty quick after mentioning your laptop and other expenses.
Yes, that is true. Side hustles are hobbies. Furthermore, even if they actually generate income from the side hustle, the expenses still have to be ordinary and necessary with respect to the side hustle. So, if someone has a side hustle of selling old clothing online, they cannot deduct a $1,500 trip to Cabo and call that a business travel expense. Or, they cannot buy a new MacBook which they use for largely for non-side hustle activities (i.e personal use) and expect to deduct the full cost of the MacBook against their side-hustle income.
Couple things. A 1099 is for independent contractors or the self employed (maybe you meant 1040?). When you work for most employers, you'll be a W-2 and have taxes withheld by the employer. Second, don't forget a 401k is great and all (and probably not be offered if you are a 1099), but there are tax implications down the road when you retire and there are entire strategies for Roth conversion and/or withdrawals in retirement to optimize/minimize taxes before required minimum distributions (RMDs) starting at 73 years old currently when your tax bracket could actually be higher than when working. You also won't have capital gains taxes selling stocks within a 401k (Warren example). It's all tax free until you start withdrawing in retirement (hopefully after 59 1/2). I think almost all of the funds in 401k's are mutual funds or exchange traded funds (ETFs), not individual stocks.
Your videos have great production technique!
Tax write-offs aren’t always good things. You still have to forgo the cash required to purchase the item that you want to write off. Furthermore, the purchases have to be ordinary and necessary for the business. That is a strict standard to meet.
For example, you cannot write off a trip to Cabo with your friends and family just because you used your business credit card to pay for the trip and because you have a “side hustle.”
There is missing a nuance with jets. Writing off the entire jet is using bonus depreciation. Which as of 2023 you can only write off 80% of the total amount that is depreciable over < 20years first year through IRS179 bonus depreciation. So for a 10 mill jet you can only write off 8 mill as of 2023. (IRS 179 phase out)
Yes, and Grant Cardone still needs to meet the business use tests. So, if the jet is used for personal purposes, generally, the portion of the cost represented by the percentage of time that the jet is used for personal purposes would not be deductible.
So, you can’t just purchase anything and claim it as a business expense. Whatever is purchased still must be ordinary and necessary for the business and generally must be used at least 50% of the time (for listed property) for business to even be considered deductible as a business expense.
I love how transparent your content is. That goes a long way 💯
These are helpful tips. I like the chart you made showing tax credits and tax deductions. Thanks for the information
Much needed loved this.
Glad to hear :)
Subbed, great content!
😇 good infourmation
Valuable content, thanks!
Thanks you!
This was excellent, thank you for the information!
Make detailed video on mixing tax on salary, with side hussle losses, investing in such a way that u money gets reinvested automatically, without tax deduction, & ofcourse tax credits
golden episode 💯💯💯💯💵💵💵
This is a great video. The rich draw a much higher portion of their gross taxable income from capital gains than regular folks who mostly earn ordinary income. This means that rich folks are paying via the generally lower rates bracket that applies to cap gains on a larger portion of their taxable income, and also deducting capital losses carried over from previous years, in addition to itemizing expenses. You're absolutely right, there's not a whole lot that rich people do to minimize income tax that regular folks can't also do on a smaller scale. But you have to read the Code, or at least the tax form instruction booklet, and understand it - and a lot of people don't want to do that. And, you have to stop spending that $50 a week on ice cream and lottery tickets and invest it instead.
Thanks :)
The only itemized deduction that rich people benefit from is the deduction for charitable contributions. Mortgage interest is limited to interest paid on principal up to $750,000 (post 2017) or 1,000,000 (pre 2017). State and local taxes are capped at $10,000. However, charitable donations are deductible generally up to 60% of adjusted gross income.
That is why rich people donate so much money to charity. They also donate to charity for avoiding the estate tax.
But, the key takeaway from this video is that there is nothing unfair about what rich people are doing to minimize taxes.
Just as you cannot claim ignorance of the law as a defense in court, you also cannot claim unfairness because you chose not to learn how to use the law to your benefit, because the law applies to everyone equally.
in the example you provided using 10,000 of income and putting this in a 401K to grow tax deferred, you noted when a person draws this money out, they would be taxed at long-term capital gains rates; however, I don't believe this is correct. They would be taxed at ordinary income rates, not LTCG rates as they have not paid taxes on this income. Any pre-tax accounts would be taxed at ordinary rates when selling these assets.
How about the INDIVIDUAL PORTFOLIO? how are those taxed.?
I dont agree to buy things to save on tax. Unless you need them
Its like spending $1 dollar to save .25 cent
I think I just found my new favorite financial RUclipsr who actually helps!!! :)
Does this work outside of America?
Can't believe this channel doesn't have more views
Great information.
Thanks!
I’m a bit confused. So if I’m putting money into my 401k how does that help me when it comes to taxes? Is the amount I invest on the 401k subtracted from my annual income? Making my taxable income lower?
Yup, 401k contributions are not taxable until you withdrawal them. Whereas a Roth IRA is the opposite, being taxed when you contribute and not taxed when you withdrawal.
@@Kingsper69 makes sense. So that also means that I’ll have less money to spend?
@@cheeriomartinez yes, you are pretty much allowing your employer to hold your pay and invest it, rather than taking it in a paycheck. The most common structure for employers is to match 50% of the amount you contribute, until you have contributed up to 6% of your salary. So if you make $100k you can contribute up to $6k, with your employer adding $3k to your contribution.
Wow, these hacks are really interesting! It's amazing how much money the top 1% can save on taxes!
I love to watch your video
well timed video! obsessively trying to maximize my tax deductions today
Good to hear!
How do you save the 2500 in Taxes? 🙄
ola muito bom esse teu video: very good
I'm surprised by the contrast in this analysis. Labeling Grant Cardone as a 'fake guru' and then suggesting he's trustworthy with tax advice seems contradictory. It's crucial to be careful with such statements, especially when it involves financial decisions. There's also a lot of other bad advice in this video that could lead people in the wrong direction. I'd suggest taking a step back and getting some real world financial experience.
Agreed!
Thank you for always sharing these brilliant financial literacy videos. There is nothing more enjoyable than attaining financial freedom.
Excellent tax strategy advice. You win when buying assets and get tax credits... ..but when Grant buys $10 million jet, it's excess cash. So, seems most people win tax game, must play the business.. Does everybody need to be "Entrepreneur" ? Thank You😊
He is not getting “excess cash” by purchasing a private jet. He is still out by 10 million dollars and that is, if he paid all cash. If he borrowed money, then of course, he will need to pay that money back. And, finally, the jet still has to be used, generally, at least 50% of the time for business.
So, it’s not the case that Grant Cardone can just use the jet to fly on vacation with his family.
So, the key thing to remember is that yes, the tax code allows business expenses to reduce gross income under Internal Revenue Code Section 162, however, they must be ordinary and necessary for the business. Ordinary and necessary is actually quite a strict standard to meet, especially in the case of buying a private jet 4 days before the end of the tax year.
The burden would be on Grant Cardone to prove that the purchase was not merely for tax avoidance purposes. He would need to prove to the IRS and/or possibly a federal judge, that the expenditure was ordinary and necessary for his business and that the jet is actually used for business purposes.
That’s the part that no one wants to talk about.
BRB Trying to put a jet on my visa rn
Lol
Great video 😍. Only comment I will make is that Warren buffet does not have 401K - probably a Roth IRA instead
The only time I'd ever listen to grant cardone is if it is corrupt or sneaky, and actually then I wouldn't trust the fraud.
🤑
👍
I like your videos and you doing a great job. but you are wrong about the side hustler case because you have to pay tax before you invest the 10,000 dollars in the stock even if you are Warren.
You don't like Tesla?
Can you give me online work?
Ask yourself this question; do you want to invest additional money into a traditional IRA like the rich do so that you can just not pay taxes? The reality is, the rich can’t access any of these funds until they sell, and when they do they’ll have a massive tax liability. If they don’t, then the money continues to grow in capital markets and is available for business use. That’s a great thing as it allows for an economy to grow and for more jobs to be available.
Once you make millions of dollars, you really don’t need any more money. So it’s no surprise that rich people choose to put their money in places where it won’t be taxed, even if they don’t have access to it.
Only place they should be 100% avoiding in my opinion are SFH. But other than that, assuming they started at 0 dollars, they made decisions and choices that you too can make.
I would 100% have our dollars from the rich be tied into capital markets rather than going to a government that spends recklessly and inefficiently.
I dont really get the reference to social justice warriors getting mad about Warren’s % taxed lol I think people across all political sides of the spectrum were upset. Of course not all, but definitely many
I watch cuz you are beautiful
IUL FOR THE WIN. 401k is DEAD
Oh yeah we can all become "infinite self bankers" 🤣🤣🤣
@@ethanmurray9417 you work for Fidelity investments I sense it
@Jonathan Sanchez no I just know whole/universal life insurance is a huge ripoff that only benefits the hacks that sell it. Term insurance and invest the difference in low cost index funds. You'll always come out ahead.
How about vote to fix the system, because someone has to pay taxes to keep schools running. Vote politicians who will fix loopholes, and not Trump who reduces corporate taxes while pretending to be anti establishment. If rich are paying low taxes after elections, the guy you elected is NOT anti establishment.
While I 100% we are currently living in said system at the moment so having this information available for free on the internet is actually amazing. But yes hopefully one of those days the rich will be taxed properly and oh their fair share.
You should learn about the history of the income tax in the United States before you advocate for raising taxes on the rich.
It is because people like you wanted to “tax the rich” back in 1913 that PEOPLE LIKE YOU pay the income tax today. Furthermore, the top tax rate in 1913 was 7% on every dollar above $500,000 (in 1913 dollars). Today, the lowest tax rate, if your taxable income is less than $12,000 (generally) is 10%. And that doesn’t even take into account the FICA tax of 7.65%.
So, keep in mind that when you advocate for taxing the rich and you are not rich or don’t plan to be, please know that you are truly only advocating to tax yourself.
U r 22 ...U look 32
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