Here are some strategies on how to pay less in taxes, and how to understand basic tax-reduction strategies to help keep MORE money in your pocket at the end of the year. Enjoy! Add me on Instagram: GPStephan The YouTube Creator Academy:
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Number 1: Traditional 401k Contribution.
This is a retirement account that’s created through your employer that lets to contribute money, and then REDUCE that from your total taxable income.
With a 401k, you’re allowed to contribute up to $19,000 per year - which means the IRS will tax you as though you have made $19,000 less. For someone in a 24% tax bracket, this could save you from paying about $4500 in taxes. If you’re self employed, you can open up what’s called a Solo 401K - which allows you contribute up to $56,000 per year.
Number 2: Traditional IRA.
This is very similar to the 401K, except anyone can open one up at any time, and you can contribute up to $6000 per year into this account that would then reduce from your total taxable income.
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Number 3: HSA - which stands for health savings account.
Assuming you qualify, with an HSA, you can contribute up to $3500 per year, TAX FREE, into this account. And this account is specifically used to pay any out of pocket medical expenses or charges that you incur…if you don’t use them one year, that’s fine, it rolls over to the next year.
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Number 4: 457 B.
This is for designed people who are employed by s state or local government, so not everyone can do this one. With a 457B plan, you can contribute up to $19,000 per year and reduce your taxable income by that amount - exactly the same as with the traditional 401k. However, the benefit to a 457 plan is that you don’t need to wait until the age of 59.5 to withdraw that money…you can withdraw it at ANY age, upon retirement, with zero penalty.
Number 5: The Standard deduction.
This is the base amount that anyone is able to automatically “deduct” from their taxable income, just because. If you’re single - you can take the $12,000 standard deduction. Super easy. And If you’re married filing jointly, this number jumps to $24,000. This is fairly straightforward, and for most people - this is an easy one to take.
Setting up an S-Corp.
This is a legal entity you create that you run your business through. This means that all of your self employed business income goes into the S-Corp. All of your expenses go out of the S-Corp. Distributions made by an S corporation are not subject to Social security or Medicare taxes. This is meant to be something to discuss with a CPA if this is something that you’re interested in, this is way beyond what I can talk about in a YouTube video!
Long term capital gains:
If you hold that investment for LONGER than one year - then sell it for a profit - it’s taxed as long term capital gains. This means that if you make less than $434,000…that long term capital gains tax is capped at 15%.
Depreciating assets within your business.
In a business, you can depreciate certain assets over X years to offset earned income! Something like this is REALLY a topic to bring up to a qualified CPA because every business asset has its own depreciation schedule you MUST follow.
HIRE A VERY GOOD CPA. THE BEST YOU CAN.
This videos main purpose is JUST to give you some ideas of strategies you MIGHT be able to implement. But because the tax code is sooooooo complicated and there are a million moving parts for each person that would be impossible to ever cover in a youtube video like this, YOU MUST hire a CPA.
Not financial advice. For ENTERTAINMENT PURPOSES ONLY. Please consult a licensed, qualified CPA for tax advice.
For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at GrahamStephanBusiness@gmail.com
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