What if I told you there are legal ways for tax payers like yourself to pay zero dollars in income taxes? And by zero, I mean not a single penny.

Well, you might be tempted to think that sounds impossible or this is just too good to be true. But over the last 25 years as a licensed CPA, I have helped my clients follow these 5 simple steps and they have been proven to work every time.

Now in this article, I’m going to share with you the same exact 5 steps my clients take. So you can learn how to keep all of your money, rather than give it to Uncle Sam. Now, let’s get started.

TIP #1 – Controlling Your Income

So the first savvy tip to help you eliminate your income taxes is called “Controlling Your Income”. Now, we would all like to think that we control our income, but very few people actually do this correctly.

Here is the mistake most people make. We get paid on pay day, our taxes are automatically taken out of our check, we look at what’s left in our check after taxes, and then we immediately feel cheated by the government. This experience leaves us feeling powerless.

We look at all the taxes we just paid and we think, I wish my taxes weren’t so high or better yet, I wish I did not pay taxes at all. Can you relate to this? We don’t realize, there are legal ways to keep more of our money and perhaps not pay taxes at all.

Now, the good news is that we can fix this. With the Controlling Your Income strategy, you will be able to strategically reduce your taxes by decreasing your taxable income. And this means more money in your pocket.

Now for this strategy to work, you will need to have a business or you can start a brand new business. Either is fine. Let me give you a real world example of how this works.

Imagine you run a restaurant. And after all your expenses, you made $150,000 net profit for the year. However, during the year you made 3 big purchases for the business.

First, you purchased a refrigerated delivery truck that cost $70,000. Next, you purchased a $40,000 specialty oven. And lastly, you bought a commercial refrigerator for $40,000.

When you take the truck, the oven and the refrigerator, they add up to $150,000.

Now, we can prepare your tax return while leveraging Section 179 which allows businesses to take an immediate deduction for business expenses considered depreciable assets.

In our example here, we had $150,000 net profit, but we purchased $150,000 of equipment on credit. And that leaves us with a $0 tax bill.

Tip #2 – Debt Mastery

Next, onto tip #2. Ever wondered how the ultra-rich pay minimal taxes? I have two words for you… debt mastery.

For tip 2, we are going to take a page from Jeff Bezos’ playbook and learn how to leverage debt smartly while decreasing taxable income.

This Bezos’ strategy involves taking out a loan on assets with tax deductible interest, like real estate for example. By doing so, you can use the untaxed profits to pay back the loan. This is what is known as a Collateralized Loan.

Here is a practical example of how it works. So let’s assume you take out a loan for $50,000 at 5% interest against some real estate that you own outright. So at 5% interest, this loan would cost you $2,500.

Next, you take the $50,000 and you invest it into the market and earn a 10% return, which is $5,000, on your investment. When you take the $5,000 you just made from your investment and subtract the $2,500 for the cost of the loan, that leaves you with a $2,500 profit. But wait just a minute.

What looks like a $2,500 profit is actually wiped out by the depreciation on the real estate that we took the loan against. So the net income on your tax return is $0, but you personally just made $2,500 cash.

This sounds a bit risky, and it is. With the profits of the investment money, you pay back your loan with untaxed money.

Normally, these collateralized loans have a lower interest rate and normally the interest is deductible for the business too.

This happens to be one of my favorite strategies that Bezos’ uses, and I use it personally too.

Tip #3 – Unearth Hidden Deductions

On to tip #3, Unearth Hidden Deductions. In my experience, some of the biggest missed tax savings often lie in the details.

By combing through your business activities and receipts, you might uncover hidden deductions like home office expenses, travel costs, or fully depreciable vehicles. As you can imagine, all of these deductions can significantly lower your taxable income.

Now whenever I take on a new client, I always recommend starting them off with a tax savings plan. With a tax savings plan, we get into the finer details of their daily business activities. And whenever we do this, without fail, we start finding hidden deductions that were not accounted for.

In fact, in a recent tax planning session, we saved one of my most recent clients $115,000 by going over their every day business activities. As you can see, hidden deductions can be a big part of lowering your income to pay less taxes, and it is important that you get help analyzing your business and how you run it to make the most of these hidden deductions.

Tip #4 – Investment Funneling

Tip #4. Investment Funneling. This is another one of my favorite income strategies of the rich. This tip works best when you understand how to time your income from investments. Let me explain.

It often comes as a big shock to most people that not all investing is created equal. With investing it’s very important to understand the key difference between long term capital gains VS short term capital gains.

By definition, with long-term capital gains, you must hold your asset or investment for 1 year or more. And for short-term capital gains, you hold the investment for 1 year or less.

Now, long-term capital gains have their own tax rules, and they’re pretty sweet. Depending on your income, you might not pay any taxes at all on capital gains up to a certain threshold.

For example, if you sell up to $47,025 worth of stock that you had long-term and you don’t have any other income, you will not pay any income tax on the $47,025 in 2024.

Now that is a really nice benefit. I have clients who sell stock all the time and if we time it to a year that their income is low or none at all, we can eliminate taxes all together.

Tip #5 – Real Estate Riches

Now for our last tip. Tip #5 Real Estate Riches. By deducting expenses like mortgage interest, repairs, and depreciation, you can turn rental income into a tax-free or tax-deferred revenue stream.

Plus, if needed, you can leverage property equity to access tax-free funds through loans. Real estate isn’t just about property appreciation; it’s a literal goldmine for tax benefits.

So how does this work? Let me give you an example. Let’s assume you bought a $250,000 home and you rent it at $2,600 per month.

That adds up to $31,200 in gross revenue from just one rental property.From there, you deduct your mortgage expenses such as interest, property taxes, homeowner’s insurance, maintenance and all repairs.

So if we assume $22,200 in expenses for the year for our rental. And depreciation is $9,000 for the year, this leaves $0 taxable income With that being said, just imagine if you have 4 properties, that would give you $36,000 in annual income and you would pay no federal taxes.

Not a single penny!

Now, remember, these along with most tax savings strategies require time, diligent planning, and often professional assistance to navigate effectively.

With a little know-how and strategic planning you can live tax free, and you will be able to keep more of your hard-earned money where it belongs – in your pocket!

Let’s Get Your Questions Answered

Now, as always, be sure to consult with a financial advisor to make the most of these tax saving opportunities.

If you don’t already know me, my name’s Sonia Narvaez. I’m a licensed CPA and wealth building strategist with over 25 years experience.

If you have any questions about how to take advantage of these tax strategies and how to decrease your taxes, don’t hesitate to contact us.

To get your FREE complimentary consultation with a member of my team, simply click this scheduling link, and pick the time that works best for you.

We would love help and meet with you

Until next time, have a great day and I look forward to seeing you soon.