You're probably paying too much in taxes.
And before you go crazy protesting that
we need more taxes, let me explain.
You know that feeling when you've worked so hard
for something and you just cherish it?
This could be learning a skill, saving up to buy a car,
graduating college.
Once you have these things,
you do just about anything to keep them.
The last thing you want is to crash a car
that you just saved up for.
I think the same goes for taxes.
You've worked so hard to make money, of course
but saying I want to pay less taxes is almost
hate speech in some circles.
That might be a little dramatic, but there's
a whole lot of protesting. Taxes are good.
We need more taxes.
We live in a society.
And yes, I agree taxes have a purpose,
And this blew my mind.
When I changed how I thought about taxes,
And that is what is the government asking us to do?
Well, in the tax code, they basically have one line that says
all income is taxable unless we say it isn't.
And then they have another line that says
no expenses are deductible unless we say they are.
Then we have all sorts of charts and graphs
telling us how much we should pay.
But that's maybe 30 pages.
The actual tax law is over 6000.
The other 5970 pages is just a series of incentives
and exceptions to get you to do
what the government wants you to do.
When you pay taxes, you have a partner.
That partner is the government.
So what does this partner want you to do?
And how will they reward you for that behavior?
In today's tax law,
I'm going to tell you something that
might shock you a little bit.
You're probably doing it wrong.
You can choose to pay high taxes,
and the government is totally fine with that.
Or you can partner with them,
do what they want you to do, pay low taxes,
and they're totally fine with that, too.
I personally would never demonize someone
for going on unemployment, nor would I demonize them
for trying to save a little bit on their taxes.
Sure, an argument can be made that billionaires
need more tax, but that's not what this video is about.
I don't care about the few billionaires.
I care about the average person
who is paying too much in tax.
So in this video, I'm going to cover
methods that can land you with as little as 0% tax
on six and seven figure profit.
And again, this is by working with the government
and within their rules.
So normally when you sell your crypto or stock for profit,
you'll pay what's known as capital gains tax.
There's actually two major types:
Short term capital gains
and Long-term capital gains tax.
If you held for under a year,
you'll pay short term capital gains tax.
Short term gains is based on your income,
which can be as high as 37%.
If you held for more than one year,
you'll pay long term, which is a lower percentage.
And I have some great news right off the bat
for those in lower income brackets.
You don't have to pay any long term capital gains tax
in some situations.
If you held an asset for more than a year,
your long-term capital gains would be 0%
as long as you had sold less than $41,675
in taxable profit in 2022.
Now this is before write offs,
because we have capital losses as well.
Any time you invest in something and sell it
for a loss, this can actually be written off
against your capital gains.
So here's an example.
Your friend Clark, he's been a bit wild
and reckless when it comes to investing.
He threw $40,000 into two separate DAOs,
promising a reasonable 9 trillion % APY.
One week later, he sells both of them.
One dropped 50%, resulting in a $20,000 capital loss,
the other increased 25%,
resulting in a $10,000 capital gain.
If he keeps good records,
he can actually benefit to some degree from this loss.
At tax time, Clark can write off the $10,000
in gains with the $20,000 in losses.
He'll pay $0 capital gains tax
on those $10,000 of gains.
And now, even better, his remaining $10,000
that he can use to write off either against future capital gains or
$3,000 per year against ordinary income.
This is a must use strategy if you have any capital losses.
Of course, consult with your accountant always, though,
because this is for entertainment purposes only.
But losses aren't exciting.
We want to know how to save against massive gains.
One kind of extreme method of tax savings is using a CRT.
This is one of the few ways to save tax
on capital gains after you've already made the gains,
but before you sell.
How this works is you have a lawyer set up what's called a
You send your assets to that trust,
which is actually tax deductible
because it's considered a charitable entity.
Every year you get paid an annuity payment from that trust.
This happens until you die.
Once you die, the remaining funds will go
to a charity that you determine
when you set up the trust.
But what about sending an inheritance to your kids?
It's kind of one of the biggest points of making money.
What many people will do is for their
first few years worth of annuity payments,
they will buy a life insurance policy
with their children as a beneficiary.
So the tax bill is reduced by doing this,
you get payments for life, your kids get an inheritance
once you die and you benefit charity at the end.
It's a pretty neat deal all around.
I'll have a video in the description that goes even more
in depth on this strategy.
Now next, we have something a bit more controversial.
It's called a deferred sales trust, or a DST.
The idea is you create a deferred sales trust, and
Let's say you bought $100,000 worth of Bitcoin,
and it's now worth $1 million.
First off, Congratulations.
You would sell the trust your Bitcoin for $100,000,
because this technically means you have no capital gains.
Then the trust can do a variety of things
with those assets, like sell them, reinvest them,
or pay you installments.
Now, many people seem skeptical of this approach
because it lands in kind of a legal gray area,
and it can be quite expensive to do.
So to be honest, it seems like for most people,
this wouldn't be the very best option.
But I wanted to just highlight everything in this video.
Now let's talk about something that's a bit easier to do
and great, either if you expect to see a
ton of capital gains in the future or if you're a frequent trader.
This is amazing. This is called a self-directed IRA.
So a self-directed IRA is retirement account.
Except being limited to specific investments
like stocks or mutual funds,
you're able to invest in all kinds of assets.
This is actually what Peter Thiel did,
and he has an account worth $5 billion that
he will never have to pay tax on.
That is, unless Congress forces him to do so,
but that probably won't happen.
So with a self-directed IRA, you can place
crypto directly into a retirement account.
Let's do an example using a Roth IRA.
We're investing $6,000 in Bitcoin, which is the
annual contribution limit into a self directed Roth.
You'll pay regular tax on the money going into the account,
just as you would with any normal investment.
But after that, you pay zero tax,
even if every single day you trade within that account
from one crypto to another until retirement.
So you deposit $6,000.
Let's say you traded your way up to $100,000
by the time you were 59 and a half years old.
At that time, you could take your profit
of $94,000 and pay no tax.
If you've done this in a regular account,
you'd be hit with tax on every single profitable trade,
lowering your amount with taxes every single time.
Now, people might stay away from this because
you can't begin pulling out profits
without a penalty until age 59 and a half.
But there's actually a loophole for this.
I'm telling you, there is a loophole
for literally everything.
This is called SEPP
This will allow you to remove funds
from your account without penalty as long as you
spread that over five years worth of payments.
Doing this allows you for early retirement,
if you hit it really big, you don't have to wait till 59 and a half.
Of course, please talk to an accountant
if you want to take any of these kind of more loophole type strategies.
- So what is it that you want to talk to me about?
- A few of the biggest providers for
self- directed crypto Roths are
Directed IRA, Alto and iTrustCapital.
Now, iTrust is actually a sponsor of mine, so
if you like their offer, you can actually use the link
in the description of this video and get $100
in free Bitcoin just for making an account.
Now next, I want to give you a warning
because a lot of people don't know this
and it could cost you a lot of money.
If you trade one crypto into another, say Bitcoin into Doge,
this is treated like selling Bitcoin and then using the
profits from that sale to buy Doge in the eyes of the IRS.
So if you have a lot of profits in one crypto,
just make sure to take careful consideration
before you sell it or swap it into another crypto
because that will be a taxable event.
And after you sell, the cat is basically out of the bag.
It's much harder to save tax at that point.
I did some digging and I found a horror story
on exactly this from a Reddit user.
It's bad. At the advice of his friends, he took
his savings and bought about $7,200 worth of Bitcoin
back in early 2017 and it worked fantastically for him.
It jumped up to about $120,000,
but then he got caught up in the altcoin frenzy
and sold his Bitcoin for some altcoin.
Little did he know he would then owe income tax
on those trades, which added up to about $50,000 in tax.
And this would have been fine.
But the price of crypto crashed
and his stock dropped from $120,000 to about $30,000.
So his portfolio was worth $30,000
and he had $50,000 in tax.
Now, yes, he should be able to write off
some of the capital losses here
from those bad trades, but
that's not a situation that you want to be in.
Now, remember how I said after you sell,
there's not much that you can do?
Well, that was a bit of a fib.
There is something things you can do with your profits,
but it's a bit more of an active approach.
This is using your profits to invest
in opportunity zone real estate.
So remember, the government is our partner
and they're willing to incentivize us
to do what they want us to do.
The government want's more investment in areas
that they deem to be economically distressed,
and you can save a ton of tax
by doing what they want you to do do.
Let's say you were sitting on $1 million
in long term capital gains on Bitcoin.
If you were to sell outright, you'd have to pay 23.8% tax.
So $238,000 in tax.
But if you were to invest the profits into a
qualified opportunity fund, a QOF,
within 180 days of your Bitcoin sale,
you can save big on tax,
but this depends on how long you're willing to
keep your money within the fund.
The first is tax deferral.
Investing your profits in a QOF means the taxes
are deferred until either December 31, 2026,
or when you sell the QOF position,
whichever comes earlier.
If you keep your money in the fund
for at least five years, then 10% of your profit
will then be tax free, meaning you'll now
only be taxed on $900,000 in profit
instead of $1 million in profit.
At seven years, 15% of your profit is tax free.
But remember, you still have the tax on the
profits from your new opportunity zone investment,
because that is ideally appreciating in value as well.
However, at ten years, you can completely
avoid the capital gains tax on the appreciation
of your opportunity zone investment on top of
your 15% savings on the initial profit.
And the idea is by the time ten years
goes by, you've been able to earn far more
money off of that opportunity zone investment.
Now, again, this is a bit of an advanced strategy,
so please talk to a tax professional.
Next we have something I'm very familiar with.
So in 2012, Puerto Rico launched a tax incentive program
allowing people to pay far lower taxes
after moving to the island
and after first doing a ton of paperwork.
The idea is that these incentives will
bring highly productive people to the island
to help stimulate the economy.
I don't know if you know this, but I moved to Puerto Rico
in 2021, and I can attest to
the tax incentives, the fact that they're real.
But there is a lot that isn't talked
about that I wish I knew beforehand.
So on face level, there are two major programs:
Export Services, which offers a corporate tax rate
as low as 4%, and the Investors Act,
which offers capital gains as low as 0%
for gains made after you move to the island.
My appeal was on the Export services side.
So the 4% tax, that's real, but you
also need to figure in paying yourself
a reasonable wage at regular tax rates.
City taxes, business licenses,
additional very expensive accounting,
far more rules and guidelines to follow within
the taxes, an extremely long and expensive application process
and a higher cost of living.
So all in the true tax rate is probably more like 8% to 12%
depending on your level of income, which is amazing.
Don't get me wrong, however, all the time I'll hear
people say that it's just a flat 0% tax
and all you need to do is just move there
and you're good to go.
It's not quite that easy.
It's absolutely worth it.
I'm extremely grateful for it, but it's not that easy.
On the capital gain side, it is a bit more simple.
which I think honestly is a great aspect.
And that program offers 0% capital gains tax
on gains made after you establish
your residency within Puerto Rico.
If that makes sense for you
and your lifestyle and your finances,
I couldn't recommend Puerto Rico enough
It's pretty awesome.
Now let's finish off with the most extreme and
probably impractical way to avoid the oversight of Uncle Sam
simply giving up your US citizenship.
Now to do this, you'll need to have
citizenship from another country, and luckily for you,
some countries will just sell you one.
For example, Antigua and Barbuda
will sell you a passport for $100,000 and
you'll just need to be a resident for five days
and the overall process takes about three months.
This will allow you to travel to 150 countries visa free,
which isn't bad at all.
For ultimate travel freedom, though,
you'll probably want to go with Malta.
Malta offers 182 visa free countries,
but you'll need a fork up around €750,000
and lived there for a year.
I tried to find some stories online of
people who actually did this, and it turns out
one of the guys who created Facebook and Jet Li both did this.
However, even this doesn't mean
you avoid current taxes.
If you hit any of these criteria,
you'll actually have to pay taxes on assets,
even if you don't sell them before leaving your citizenship.
This is called a
Now, there are certain exclusions and exceptions to this,
but the point is you're not going to
avoid taxes completely on your exit.
So as you can see, navigating taxes is often
a matter of understanding what the government wants
and their rules.
Once you know this, there are all kinds
of creative angles that you can take
to pay a more reasonable amount of tax.
If I missed any strategies, make sure
to comment those down below.
Also, if you'd like even more content,
access to my portfolios and buy alerts and free coaching,
make sure to join my Patreon linked in the description below
for as little as $10 a month.
Let me tell you, there is a ton of effort
that goes into that community,
like a metric ton, you'll love it.
Also, check out the video on screen for a
more in depth look at crypto taxes.
I would like to thank you so much for watching
and I hope you have a profitable day!
- And that Lauren, is how taxes work.