Minimize the taxes you are paying out every year and keep as much money as you can using the tax code. As an employee, you have very little control over what you can deduct from your personal taxes. And there are some deductions that actually go away if you earn above a certain amount of earned income. However, if you start paying attention to the tax code and take new actions, you can keep more money in your pocket and retire faster.
And if you know the tax laws, then you will be smarter in how you invest. For example, using an IRA or a Qualified Retirement Plan (QRP) would create tax-free growth for flipping houses, buying notes, and buying stocks. However, buying real estate and having the taxes roll up to you personally, maybe best for reducing your tax liability to zero.
Here are three ideas to minimize taxes and maximize what you keep:
1) Start a business and take the most business deductions you can. There are many ways to legally reduce your taxes with a business even if it loses money the first few years.
2) Set up a qualified retirement plan (QRP) for your business and maximize your personal contributions. There are QRP’s that allow you to put up to $61,000 towards your retirement every year. This is where you can grow your money tax-free quickly. Compound interest is your friend so the sooner you can start, the better. And only you can take advantage of this financial tool because you are a small business owner.
3) Invest in real estate to get depreciation. There is a saying that if you are paying too much in taxes, you don’t own enough real estate. We also believe that paying income taxes is a choice because real estate allows you to deduct all of your income if you meet the requirements of the tax code. Every situation is different, so get great tax advice.
Here are some ideas to get you started on keeping way more money in your pocket every year!