How to LEGALLY Avoid Paying Any Taxes

Oh, that's hot. You know, most people are paying more in taxes than they should be. Ouch! Because they just don't know how to like legally avoid taxes. Turns out that when you burn cash with hairspray, that it really stinks. No one really ever told me that. But you know what else stinks? Paying too much in taxes. And so today, what I want to do is I'm going to show you how to legally avoid paying taxes. Now, I'm not talking about like doing things illegally. I'm not talking about tax evasion. And you should also know that I am not an expert in the game of taxes. I'm going to be quoting LegalZoom. I'm going to be quoting other websites. And I'm going to share with you what I've been doing in the game of real estate, business, wealth to reduce that tax liability even to the point that for the first 7 years, I started making really good money, I never paid anything in taxes. The reason why we're even having this conversation is because check out the top 3 expenses people have in life. This comes from Motley Fool. They say people spend 16% of their earnings on housing. They spend 14% on transportation. That is some nice transportation. And they're spending 12% on taxes. 42%. Almost half of their income is literally going back out the door. It's being heavily taxed. And so, anything that you learn in today's video, you should verify with your own tax and legal counsel. Because I'm not an expert in the space. I'm just going to illuminate some of the strategies that other people are leveraging. Maybe myself and that you should be too. Think about it. If you're like most people, you spend your prime time hours every week making as much money as you can so that at the end of the year, you've made a stack of cash. Problem is the federal government, they want to tax you on the money that you've made. The state that you live in likely wants a piece of the action. So, at the end of the day, there's only a certain amount of the money that you've made that you get to keep. Remember the Boston Tea Party? That was over a proposed 3% tax and that led to a revolution. Today, we're accustomed however to paying our taxes. Today's video is designed to help you get all of the ideas and information that's out there to understand the biggest tax savings so that you can reduce those taxes and keep as much money as possible. For you to understand today's video, you've got to understand 2 terms. The first one is what is called a tax deduction. The second one is called a tax credit. A tax deduction reduces the amount of income that can be taxed. As in, I made $100,000 and the question is how much of this is actually taxable? On the other hand, a tax credit allows the person who qualifies for the credit to have that amount reduce his tax liability. Man, Kris, that seems a little confusing. Can we break that down? Sure, check it out. Take deductions for a moment that are designed to reduce your taxable income. Let's say for example that you have a $1,000 tax deduction in a 25% tax bracket. That means that you're actually going to save $250 in taxes. However, a tax credit is different. You see with a credit, a $1,000 tax credit in any tax bracket saves you literally $1,000 in taxes. Which basically means that tax credits are more valuable than tax deductions. For today's conversation, both are going to be super important. My first mentor told me, Kris, you need to own a business. And I said, what if I don't want to own a business? And he said, Kris, the reason why you want to own a business is because you're going to get all sorts of tax deductions that you're not going to get and if you don't own a business. Most popular business many people own is an LLC. For example, when I buy real estate, I do it inside of an LLC. It stands for a limited liability corporation. There's also C-corps, S-corps. Get tax advice. Start the proper type of corporation. But the bottom line is this is a formal business. And check out some of the cool things that come my way. The first deduction for you to be aware of is a rental expense. If you work out of a home office, you can deduct a portion of your mortgage or rent from your taxes. My first mentor said, hey, Kris. You literally bought a home and when you use that home office, there's a portion of that house that you are using for business, you get to actually write that off. By the way, you should also talk to your CPA about renting out your house for your business up to 14 days of the year. There could be some buko buck savings there. Next, you got charitable giving. Did you know that an LLC can deduct charitable donations of up to 10% of its taxable income? For me personally, I love to donate, I love to give. I'm always doing 10% or usually a whole lot more. So, this is actually very meaningful to me. And then number 3, meals and entertainment. From LegalZoom, they say half the cost of meals and entertainment related to business meals with employees can be deducted in full. And Biden just said literally through 2023, you can write off 100% of those expenses. Again, that little bit can add up to a stack of cash. And according to LegalZoom, there's a whole lot more. Literally your cost of goods sold. So, when you run and operate a business, when you sell things, paying for independent contractors, insurance, tangible property, professional expenses, legal expenses, per diem for out-of-state work and a whole lot more. Basically, every expense that you have in running a business is something that you get to write off. You know what? Sometimes, you have expenses that provide you some personal benefit. And so, you got to talk with your CPA and say, ''Hey, my business actually adds a lot of beautiful value to my life. How much of that can I legally and lawfully write off?'' Those are really important conversations for you to have. Because at the end of the day, there's a lot of perks to owning a business if you get my meaning. As powerful as all the tax write-offs in business are, the truth is there's even more to glean from real estate. In fact, I'd go so far as to say that real estate is the number 1 tax write-off for these 5 main reasons. On the second property I had ever owned, I bought it significantly below market. And it also went up in value. Check this out. I got to the point where it was worth $250,000 but I owed $150,000 on it. I went to the bank and I said, ''I want to do a cash out refinance.'' Literally, I want to restructure the mortgage and they allowed me to restructure the mortgage at $200,000 instead of 150. And what that did is it put $50,000 of cash in my hand. I literally said, ''I want to increase the mortgage. Give me some of that cash.'' And when they redid that loan, I walked out with 50 G's. And guess what my taxes were on the 50,000? Nada. I didn't have to pay any taxes on it because a refinance falls under what's called a tax deferral. It's only when you sell the house that you have to pay taxes. Guess what I did with the 50 grand? I went and bought another house. I kept the house, I kept its cash flow and I used its assets to go buy me another house. That's one of the first of 5 major benefits on why I love real estate for tax benefits. Number 2 is what's called a 1031 exchange. I know, sounds kind of weird if you've never heard it before. Here's what it is. In real estate, a 1031 exchange is a swap of one investment property for another that allows capital gain taxes again to be... Here's that word. Deferred. Just like a refinance, you literally can sell the property, transfer it into additional properties. Never have to pay the taxes on it. Because you're basically saying, ''I want to keep the asset. I just want to change it into a different asset and I don't want to be taxed along the way.'' So, one of the things that you start learning about the game of real estate is that if you never really sell it, you're just transferring it from real estate to more real estate to more real estate that you may not ever really have to pay taxes on. Third benefit, appreciation. You just got to understand that when you hold these homes, they go up in value. But again, you don't have to pay capital gains on the increase. That only happens if you actually go to sell the property. Which basically means you could start by buying a single home and then later say, ''You know what? I want to refinance it. Not pay the taxes and turn it into 2 homes.'' Or you could say, ''What if I want to sell it and buy 2 more?'' I can do that through the 1031 exchange. Well, these homes are going up in value. And at the end of the year, if it went up 10,000 in value, 20,000 in value, 50,000 in value, the government's not going to come knocking on your door saying, ''Excuse me. Your assets have gone up in value. You got to pay up.'' That only happens if you actually ever sell without doing a refinance or a 1031 exchange. Now, let's get to the fourth and one of my favorite tax benefits of real estate. It's called depreciation. Kris, what's depreciation? Depreciation is where you say, ''I bought this house for $250,000 and the bank allows me to depreciate it over 27 and a half years.'' We say, ''Well, what does that mean?'' If I take $250,000 and divide it by 27 and a half years, that amount basically comes to around $9,100. The government basically says, ''Kris, you literally can... You can get a tax deduction of an additional $9,100 off of this property every year.'' But don't forget I got positive cash flow coming in. Let's say that I'm making $400 a month of positive cash flow. And let's say over the course of 12 months that I'm basically pulling in $5,000. So, I've got $5,000 of money that is literally coming in my pocket and yet I have this $9,100 tax break. So, at the end of the day, this tax break is almost always on single family homes bought below the median. Going to be larger than the cash flow. It cancels it out and you still have $4,100 of tax benefits. But the $5,000 is literally in your hand. It's like... It's cash. It's in the bank account. You can spend it and you don't have to pay any taxes on it. So, you start saying, ''Well, Kris, wait a second. This tax benefit of $4,100, what if I bought 10 properties like that?'' Well, then all your cash flow would be tax-free. But in this theoretical example, there's now $41,000 that you get to write off against your income. So, let's say that you made that year $100,000. You get to subtract $41,000 off of that. It's going to lower your tax bracket. And all of a sudden, it's going to look on paper like you only made $59,000. And yet all of the... All the tax benefits, all the cash flow is literally in your pocket. How crazy is that? Like you might be having a moment right now where you're saying, ''Wait a second. You're telling me Kris that if I buy real estate, that if I refinance it or 1031 exchange it, that I can keep it in real estate. I could even put money in my pocket and I don't have to pay the taxes because it's deferred. Or you're saying that it still goes up in value but I don't have to pay capital gains on that as we go. You're saying that I can depreciate it which allows me to take all my positive cash flow and keep it. And in this example, still stack up thousands and maybe tens of thousands of dollars of additional tax benefits? Yeah. That is why 90% of all millionaires made it in real estate. This is why rich people own real estate. And many of them got rich because they bought real estate. Lastly, you have to understand the long-term capital gains. Basically, long-term capital gains are smaller percentages than short-term capital gains. Real estate is taxed with long-term capital gains which again basically means there's more tax breaks headed your way. In fact, let's say in theory that you owe $10,000 in taxes and you had one dependent. That one dependent is going to literally lower your taxes from $10,000 owed to $8,000 owed. You pump out 4 more babies, basically you're going to wipe out your taxes. On top of that, higher education, there's up to $2,500 in your tax credits. And then there's the saver's tax credit which means if you dump money into 401Ks, IRAs, you can get up to $1,000 per your tax credit. Government basically says, hey, make sure you're saving money for your own retirement because guess what? No one else is going to do that for you. If you watched today's video and a little bit of this information went right over your head, you can rewind and watch again. Or check it out. I'm going to share with you my summary. What should you do with the information that I shared with you today? Number 1, own a business. Track and write off everything. Literally, you go out and have a meal and you pay 100 bucks, that's $100 deduction that you can take off of your income so your taxable income shrinks. If you were going to pay $20 for every $100 on tax, think of it this way. When I spend literally $100 on this meal, there's $20 at the end of the year I'm not going to have to give the government because I got to write it off. So, start a business, track right off everything. Number 2, own real estate. And as cheap as money is right now, buy as much real estate as you can. And what I want you to do is depreciate it while you cash in on the cash flow. Like buy a property that puts as much money in your pocket as possible knowing I don't got to pay taxes on that. In fact, beyond that, if I'm buying single family homes under $300,000, the math is almost always going to work out in a way where you're going to pick up huge tax benefits while not being taxed on any of the cash flow. Number 3, never sell your real estate. As in like, hey, if I sold my house, I'll make $100,000. Well, you're going to have to pay some taxes if you do that. Instead, transfer that into more real estate. Or if you need some cash, do a cash out refinance and hold on to the home. You can literally put a fat wad in your pocket that you can spend however you want. Taxes don't come due until you actually sell the asset unless you 1031 exchange it. Never sell your real estate. And number 4, you can shelter money in a life insurance savings account. I've got other videos. One popping up right over here that'll actually show you how to actually build a life insurance account in a way where you can get some huge tax benefits out of that as well. Listen, if you're a subscriber on my channel, you know that almost every day I'm dropping videos to increase that financial wisdom and awaken that financial genius. Some of the ideas today might have gotten you excited. Some of them might have scared you a little bit because you didn't fully understand them. If you want to roll in more money but you want to make sure that you're doing it as intelligently as possible by not paying unnecessary taxes that you shouldn't be, I want you to click the link below. Literally, I launched a cool little piece of artificial intelligence. It's a little bit of Kris Krohn in your back pocket. Where if you just answer the questions in the link below, I'm going to take that information and I'm going to feed you a custom game plan. It might be, hey, you do need to start a business right now. Or hey, you need to start owning some real estate. And you know, that doesn't always mean that you have to pay a bunch of money out of your pocket to get that going. There's ways of doing real estate that don't require any money, any credit. Dude, I know because that's how I buy almost all of my real estate. If you're looking bottom line for advice right now on making more money and paying less in taxes, click the link. Answer my questions in this dynamic video and I'm going to spit out a custom game plan that will literally show you what I would do if I was in your shoes. And you know what? I can't think of anything more powerful than getting advice from a multi, multi, multi-millionaire that basically says, if I woke up as you today, what would I do? If I had your job, if I had your lifestyle, if I was making your choices, what are the choices that would lead me to making my next million dollars as fast as possible? If you want to know what that looks like, click that link. That information is free because I believe that that knowledge will empower you understanding your next choices, your next actions. And at the end of the day, make a lot more money and pay a whole lot less in taxes. Biden is threatening to take away the 1031 exchange. This would be really, really, really bad news. In fact, if you thought, in my future, I do want to buy real estate and I want to pass it on. And I wouldn't build generational wealth, then you should care very much about the 1031 exchange. If you want to learn more about what that is and what you and I can do to make sure we keep ourselves protected, click this video, watch it and I'll show you what the debate's all about. I'm amazed that happened. It did burning. I know. I'm not surprised that the maybe.