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“To find a cause that’s larger than yourself and then to give your life to it.”
— Shimon Peres

It’s been said that there are two certainties in life: Death and taxes.

Number two is actually optional!

The reason I say that is because I was able to reduce my taxable income.

I was paying a 25% taxable rate on my income as a higher earner (over $200,000 a year).

I got it down to about 1% per year.

How did I do that?

We’re gonna talk about it!

Today, I’ll walk you through several tips to use on your year-end tax plan.

There may even be some things you can do right now that will help you pay less taxes this year.

Let’s jump into it!

1. How to Reduce Your Tax Bill

Some say the easiest way to make more is to pay less taxes.

If I’m making $200,000 per year and paying 25% or 30% in taxes, my take home cash would be around $150,000 a year.

That’s a significant drop!

When this happened to me, I realized if I could pay less in taxes then I could actually make more money.

One obvious option to achieve this is spending less.

When it comes to taxes, that doesn’t necessarily help.

You can also use a retirement account such as a Roth IRA, an IRA, or a QRP.

You can use depreciation from real estate expenses.

These are all paper losses.

You haven’t lost money, but on paper there is a loss so you can use it against your income.

In addition, there’s something called the real estate professional designation.

I’ve done this and will potentially be paying zero or close to zero taxes.

I highly recommend that everyone should look into the designation for them or even their spouse.

Lastly, there are opportunities in the energy space that allow for tax credits.

2. Offset Gains With Losses

Now, how do you use these paper losses?

There’s this idea that an investment gives you a certain amount of losses even though you didn’t lose money.

That’s pretty cool!

You didn’t actually lose the money, but on paper it says you did.

The reason this happens is something with the tax code.

If you know how to crack that code, you can actually take advantage of the tax system.

Let’s say you have an investment property you sold with $100,000 in gains.

You would be paying on those gains unless you found some losses to cover it.

You might be able to sell some stocks while they’re down and buy them back.

Maybe you’d have a loss to lock in and use against some of those gains.

You could invest in a multifamily deal and get 70% to 90% depreciation that you can use against your income or another investment income.

My friend Eric Shelly has this in the energy space.

He has something called carbon capture that helps capture the carbon produced in oil and gas.

There’s a lot of benefits, including potential W2 or 1099 income, that can be reduced through investing in things like carbon capture.

It’s super unique!

There are quite a few investments out there where they reduce ordinary income even if you’re not a real estate professional.

That’s something I call the holy grail when it comes to tax reduction or investing.

I also want to mention retirement accounts again.

They reduce your taxable income and you don’t pay taxes until you withdraw later.

If you can put in the maximum amount that will reduce your taxes and income for this year, you’ll pay somewhere down the road.

If you make less than $100,000 a year, you can put money into a Roth IRA.

With a Roth IRA, you pay the taxes now and never get taxed again.

3. Giving Back

What does it mean to be someone who reduces taxes and gives back at the same time?

We know the US the tax code gives deductions for people who donate to charities.

They use that against ordinary income.

If I give $50,000 to a cause I believe in, it’s a $50,000 reduction on my taxable income.

Isn’t that awesome?!

I’ve been able to use some of these strategies to 20x my net worth.

I haven’t done that so I can live a lavish lifestyle.

I really want to make a difference in the world.

One cause I believe in is modern human trafficking and slavery.

There are 20 to 40 million human slaves today.

That’s around 3x the size of the greater Los Angeles area.

It’s hard to believe that that’s even possible.

I’m involved with a cause called Dressember.

My goal this year is to raise $5,000 to help fight human slavery.

If you’re interested in getting involved with that, here is a link to the site.

You also get a tax deduction for getting involved.

Whatever cause you believe in, I encourage you to give.

Make it your cause.

Enjoy making a difference in the world.

By doing that, it makes the world a better place – and, as a bonus, it could help reduce your taxable income.

Now I want to hear from you!

How do you plan to reduce your taxable income?

Let us know in the comments below.

Before you leave, make sure to check out our special report about inflation investing. It shares the best choices to invest during an inflationary environment.

If you are interested in investing with us, we are happy to answer any questions that you may have. Join our investment club today and we will be in touch.

Disclaimer: I am not your investment advisor or tax professional. This is for educational purposes only. I am not giving specific tax or investing advice on what you can do. I am simply giving my opinions.

Bronson Hill

Bronson used to work as a consultant for a medical device company but switched to investing in apartment buildings to make his money work for him. He started with a single rental property that made good money and, after some advice from a family member, moved into bigger real estate projects. Now, he's all about helping others get into this kind of investment to earn money without having to work all the time. When he's not dealing with investments, Bronson loves to travel, write songs, stay active, and help fight modern slavery through his work with Dressember. He believes in working smarter, not harder, and wants to share how that's possible with everyone.

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