hey tech wait here and welcome to the
tech elite show I am your host the tech
lead and I hope you are having an
amazing text a happy tax day to
everybody out there I've been working on
my taxes over here and I think I've just
about finished them looks like I'll be
paying just under a hundred fifty
thousand dollars in taxes we're just
great it's a lot of fun so much fun
doing this stuff and I absolutely love
paying taxes I love paying taxes as much
as anybody else out there I needed that
now I tried I tried to get these taxes
as low as I possibly could you know I
figured it with these numbers I played
all sorts of tax tricks everything that
I could I tried to opening up offshore
banking accounts none of it really
worked and at some point I just said
screw it I give up I'm just gonna pay
the taxes and this is what I came up
with now while we're on the topic of
taxes in order to better prepare for
next year I thought I would give you
guys some of my top tax tips because
taxes are important they end up taking
probably half of your total income and
it's a shame that nobody ever teaches
you any of this stuff schools never talk
about that much your parents never tell
you about it and then you just get
thrown to the Wolves out here now the
first tip I have for you is that the tax
out for turbo tax it's tax deductable
which is great you know $50 it's a
rounding error by this point really the
first extra tip I have for you is with
having a small business if you're not
running a small business you've got
nothing a small business opens up a lot
of opportunities and it is one the best
tax breaks that you didn't get out there
because you can take business deductions
before we can do this this video by the
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before we can do this video I want to
warn you guys full disclosure I am NOT a
tax accountant although I very well
could be and I'm not a CPA although I
could be that too so take all of this
information as is as my own
opinion for entertainment purposes only
I advise you to get this information
checked if you're going to implement any
of it see a tax advisor and confirm any
of this because it can get pretty tricky
all right so the first thing you want to
do is get a small business set up
because this allows you to take business
tax deductions essentially anything that
you buy for which you have a real
business need becomes like 40% off you
know if you want to buy a laptop hard
drives computer accessories mouse
keyboard camera equipment chairs desks
all of this stuff easily counts as
business deductions if you're using it
for your small business and you know
this could be like a website that you're
setting up so let's pretend that you
want to buy a $2,000 laptop now normally
you may have to pay full price for this
thing but let's pretend instead that you
were to go on Craigslist find the gig a
job that paid you $2,000 for programming
something so you do that job and then
you get your money and they use that
money you go buy your laptop well what
happens is you can actually write off
that laptop now because you own a small
business and you made $2,000 in revenue
that year and what's funny is even if
you're working a normal job and let's
say that normal job puts you in like a
40% tax bracket well you get that 40% as
a tax break and this applies for any
other business expense if you want to
buy a desk a chair even if you need to
take a flight or go stay in hotels for
business expenses right like let's say
there was a conference that you wanted
to check out in Hawaii so you fly to
Hawaii you do your tech conference you
stay two nights whole trip is business
expensed and you essentially get 40% off
all of that and then let's pretend you
wanted to extend your stay another week
for family vacation well yeah for that
portion you can pay on your own that's
not business deductible but the whole
flight if you wanted to say in some nice
hotel that just business deducted and so
the funny thing is this I think that
some of the best things in the world are
reserved for business usage right
business class airplane tickets normal
people aren't supposed to be really
buying that stuff and so if you don't
own the business you don't get to read
that really nice hotels like say Hilton
Double Tree Hotel that's entirely a
business class hotel and sure yeah as a
consumer you could go pay for that for
personal usage but that's not really
what it's meant for right and the
anything is that I think that living a
business life is actually pretty fun
it's actually fairly luxurious for many
people right when you're flying business
class replaces staying in business class
hotels having high quality office
equipment having good quality computers
if you're working in the creative field
like let's say you're a wedding
photographer all of your camera
equipment half off pretty much if you're
into higher tax brackets not the only
thing to be careful about is to ensure
that everything that you deduct you have
proper receipts for your document and
that it is for a true business class
usage for example I expense a lot of the
servers and computer equipment that I
use even this chair I expense because it
is for a real business usage I'm using
it to run my site businesses my web
applications now tip number two has to
do with Omega 401ks IRAs Roth IRAs and I
know that a lot of people have heard
about the 401k that's a great plan
everybody should do it but there's lot
ryx that you can do here too so the
first thing is that most people know
that if you're working you can
contribute eighteen thousand to nineteen
thousand dollars into your 401 K
sometimes I even get employer match and
you should do this is free money and if
you're in a high tax bracket like me
likes a forty percent tax bracket then
when you contribute say eighteen
thousand you essentially save half of
that that just gets tax deducted you
don't have to pay for that until later
on when you actually withdraw the money
in addition to that there's also
something that some employers will have
caught the mega backdoor Roth IRA what
this does is it allows you to contribute
after-tax money into your 401k and
sometimes this is gonna be on the order
of 20 to 30 thousand dollars and at
first you may think well that doesn't
seem to do much you just contribute
after-tax money into a 401k you don't
really get any of the benefits but the
great thing about this is that you can
actually convert that into a Roth IRA
there's a lot that lets you do this so
you essentially get 20 to 30 thousand
dollars contributed into a Roth IRA per
year the great thing about Roth IRA is
that your earnings in there grow
tax-deferred what this means is that if
you buy stocks in that account and it
starts growing after many years when you
take it out all of the earnings the
capital gains that you had on this can
be withdrawn tax-free which is pretty
nice now in addition to all that we also
have an IRA contribution that we could
not make personally that's about five to
six thousand dollars
if you're in a high tax bracket you're
not going to be able to get deduction on
that but you can also still make that
contribution and then convert that into
a Roth IRA giving you another five or
six thousand dollars as a backdoor Roth
IRA furthermore if you are self-employed
like I am I actually run a solo 401k
plan on my own which allows me to
contribute about twenty percent of my
business income into that solo 401k
which just gives me a few more tax
deductions and I haven't quite done this
yet but I heard that you can also set up
this solo 401k to also do another mega
backdoor Roth IRA contribution if you
want it to go that far now remember
there was a time in my life when I just
avoided all of these 401ks because I
just wanted the money in my pocket right
now and I thought that the government
they're gonna bankrupt our 401ks they're
gonna take all the money out and they're
gonna steal our money and by the time I
get to retirement like when I'm like 50
60 or something like that
the 401ks are gonna be bankrupt and you
know some people like me maybe actually
believe this and there's no telling if
it will actually happen but at this
point I just feel that I have so much to
lose in taxes anyway if I can save half
of that through my deductions then I
might as well try to do it that way now
my third tip for you here is that there
was a recent tax law introduced called
the tax cut and Jobs Act in which
there's a qualified business income
deduction for small businesses now this
is a business deduction again for small
businesses which is why you may want to
look into small businesses you know the
thing is that $100 made through your job
is not worth the same as $100 made
through self-employment income in which
you can deduct so much of it through
various business expenses and there's
various other small tax breaks that you
can get here and there I would value
self-employment income as anywhere from
twenty to say fifty percent higher than
the value of income generated through a
standard job just because you can get
these tax breaks so with the qualified
business income deduction you can deduct
20 percent of your business income flat
out you can just deduct that now it
starts to phase out once you reach about
150 K in single income or 300 K if
you're married at that amount the limit
is the lesser of 20% of your business
income or 50% of the w-2 wages paid out
to you
the problem is if you're working as a
sole proprietor you don't pay yourself
wages which is one reason you may want
to set up something like an LLC in which
you can actually have a business
structure in which you get paid wages
then you'll be able to take a 50 percent
tax deduction of the wages you receive
now the other interesting benefit of a
LLC is that let's say you have some
investors let's say you have some
friends some family who are investing in
your business and you start generating
the income and then you want to pay
these people out normally as a sole
proprietor you would have to pay 15%
self-employment tax on all of this stuff
but if you had set this up as an LLC
your non active investing partners are
able to take a distribution in which
they can avoid the self-employment tax
and essentially save 15% on the income
that they're generating through their
investments tip number four here is to
be conscious about tax efficient
investing what this generally means is
that for example if you have bonds I
like to put all of my bonds in my 401k
is my tax advantaged accounts such that
I don't have to pay taxes on them until
much later on when I actually withdraw
the money if you were to put bonds or
dividend generating investments into
your normal brokerage account you would
be taxed every single year and you just
lose that compound investing effect that
normally you would be able to get
similarly high growing stocks for
example you could throw those into your
Roth IRA or Roth 401k accounts because
you won't have to pay taxes on the
capital gains speaking of capital gains
I have one critical highly interesting
piece of information here for you guys
and it is that when somebody dies and
this is a sad event but when that person
dies there's actually an excellent tax
opportunity here in which all of their
capital gains get stepped up in cost
basis such that you don't have to pay
any taxes on any of this stuff this can
be applied to real estate like houses or
stocks and so for example let's say that
your parents own the house and it's
appreciated a lot in the past few years
right and if they were to sell the house
right now they'd have to pay a bunch of
taxes on this stuff but another
alternative is you wait for one of these
buses to die and when one of them died
if you're holding the property correctly
like
say like community property the cost
basis can be stepped up right away such
that the surviving spouse does not have
to pay any taxes on this and they could
sell the whole house and not have to pay
any taxes
I believe this also happens when the
house gets inherited by one of the
children as well you can just step up
all the cost basis this stocks all of
that stuff so the idea is that when a
beneficiary inherits property from
somebody the asset receives a step-up in
basis equal to its value upon death this
is both a tax perk and a way to just
simplify taxes for everybody my last and
final tip for you here is and this is
something that I've been looking into a
while back was just moving out into
another state in which there's no state
taxes you know there's a few interesting
states like you've got Alaska Florida
South Dakota Tennessee Texas Washington
and Wyoming none of which you have to
pay about ten percent or so in state
taxes of these choices for me I thought
that Texas Austin say was very
interesting that and I remember I once
went over there to take a look you know
especially if you're say a software
engineer a programmer and you can work
from anywhere in the world if one of
these states suit you like say Florida
Washington Texas you know these are all
pretty pleasant states in my book and
there's plenty others as well I'm sure
then these may also be interesting as a
way to save Texas you know if you're a
day trader as well for instance that
also allows you to work from anywhere in
the world beyond that you can also look
into the Caribbean or you can open an
offshore bank account and without do it
for me let me know your top tips in the
comments below if you liked the video
give it a like and subscribe I'll see
you next time bye