Attorney Shares (LEGAL) Tax Loopholes To Pay $0 In Taxes
Jaspreet Singh is a money guru who shares his insights and tips on YouTube. His channel goes by the Minority Mindset, and now Jaspreet has become synonymous with this brand. Sharing little known secrets to maximizing wealth and minimizing costs is the name of his game. Some don’t know that he’s actually also an attorney with professional investing, personal finance, and tax knowledge to share. This tax season, he’s letting everyone in on some of the best kept secrets to pay nothing in taxes!
Most of us don’t know all the loopholes to minimize what we’re paying in taxes, but many wealthy investors and business owners pay attorneys the big bucks to find all the ins and outs of tax loopholes for them. We’re in luck because now, all of us can use these 7 tips from Jaspreet to save tons of money on our taxes in the future.
- Stop “earning” money
This tip might sound counterintuitive, because if you’re reading this article you probably want to make more money, not less. The key here is the word earning. Instead of just making money at your 9–5 job where taxes are taken before you even have a chance to spend your earnings on a cup of coffee, Jaspreet says to try doing what the billionaires do and make money from investments and assets such as side hustles and small businesses.
Having a side hustle as an investment can make all the difference on your tax return. Jaspreet says that the US tax system works in favor of the small business owner, allowing them to deduct business related expenses from their taxable income, meaning you’ll make your money, spend it, deduct these expenses, then pay taxes on what’s left over.
So, the more you can wisely spend on your business, the less you pay in taxes because this decreases your taxable revenue. Talk about a tax break! This is why, typically at the end of the year, many businesses try to max out their spending to even out their taxable revenue.
If you own your own business, you can also choose not to take any salary at all, minimizing your personal earnings that are subject to income taxes.
2.Use debt strategically
Many famous billionaires swear by this method of tax avoidance — borrowing instead of cashing out on lucrative investments. Did you know that you can actually borrow against your shares of stock, so you don’t have to count your earnings from the stock as income? Basically, you’ll be using your stocks as collateral for a loan.
Jaspreet likes to insert a little disclaimer here — he says to always be cautious when taking on a new debt and know that taking out any debt poses a risk to the borrower.
His best tip? Make sure that the interest rate on your debt is lower than your expected rate of return on your stocks. If your stocks grow quicker than your loans rack up interest, then you’re in the clear.
3. Maximize your deductions
This is probably the most common method to decrease the taxes you’ll owe. Currently, there are so many deductions available to individuals for US earners, and many of these are for business owners. Jaspreet encourages the small business owner to see if their laptop, WiFi, and even phone bills are eligible to be deducted from their taxable income.
One of the best ways to make sure you’re getting all the deductions you can is to hire a reputable accountant. Jaspreet says that this can end up being totally worth it in the end if you pay a qualified accountant to find you all the loopholes they can.
4. Invest more aggressively
Were you aware that holding on to your investments for over a year can give you a tax break when you do sell your investments and make money on them?
Jaspreet tells us that if you sell your investment before year one, it’s taxed as regular income on your tax return. However, if you hang on to it for longer than a year, the federal tax rates are way less, and state taxes might be more lenient as well.
So, if you want to spend less in taxes, invest for longer. This also allows room for more aggressive investments that make more in the long run, because you won’t be day trading and losing your earnings to federal tax rates.
Earning money from your investments held over a year lets you pay astronomically less taxes than if you earn money from a regular 9–5 job. Put your money to work and invest more long term to save on taxes.
5. Earn money from real estate investments
Several tax loopholes exist for the savvy real estate investor. Jaspreet recommends purchasing a property you’re optimistic about, deducting all the expenses that go along with real estate ownership, as well as any debt you’re paying down for the property. He also lets us in on a little known secret — if your property is “older,” you’re eligible for a sizable tax deduction as well.
You could wind up with no taxes at all on your real estate investment earnings!
6. Sell your home to get earnings
Each year, hopefully your home is increasing in value. This is why purchasing a home rather than renting is seen as a long term investment that hopefully pays off if you keep up with your home. When you choose to sell your home, these earnings are not taxed, up to $500,000 for those filing jointly. Jaspreet says that the catch here is that you have to live in your home as a primary residence for at least 2 years. So, cash in on your property and pay no taxes on the earnings!
7. Trade your real estate investment for other real estate investments
Even if you have a real estate investment that isn’t your primary residence, Jaspreet says that you can use the money from selling these investments to purchase another property, and you won’t owe taxes on this transaction.
This tax loophole is popular with the wealthy, and it’s becoming more common as taxpayers find out the benefits. It’s known as the 1031 exchange, and it can be a huge tax break for real estate investors who know how to use it. There’s not a limit on this exchange, so sell as many properties as you wish as long as you use the earnings to purchase more real estate.
Armed with these tips, you’re bound to save this tax season. And, in the future you can take advantage of these tried and true methods to avoid (not evade) paying more taxes on your hard earned money. Take it from the expert, Jaspreet, and get to work keeping as much of your earnings as you can.