If I Pay Off The Back Taxes On A Home, Will I Own It?

I’m Ilyce Glink and here’s today’s real estate question: If I pay off the back taxes on a home, will I actually own it? Okay here’s your answer: not quite. Let me explain. If a property owner doesn’t pay the tax bill for a piece of real estate, the county assessor can actually sell the property to someone willing to pay the taxes. But in most cases, the investor who pays the tax bill doesn’t immediately get ownership of the property. Instead, the original owner has time to repay the investor the amount of the tax bill plus some interest rate, which is called redeeming the taxes. In many counties the owner has up to two years to bring the tax bill current and the investor might receive as much as 18 percent interest over that time. Now in an era where interest rates are at historic lows, 18 percent is a pretty awesome rate of return. And many people go into buying up properties at tax sales but aren’t really looking to take possession of the property. They’d rather have the homeowner redeem the taxes and earn a good return on their initial investment. Occasionally, there are situations where a tax sale may have been in error and the person that put up the money to buy the unpaid taxes at the auction may end up getting his or her money back, but they won’t get any interest on the cash. That’s not so good. If the taxes are redeemed, then the owner actually keeps the property. But if the two-year period elapses and the owner fails to repay the amount that’s owed plus interest, the title in the property would transfer to the ivnestor. And trust me, many investors wind up with title to the property. I have a friend whose brother lost several properties he owned because he failed to pay the back taxes. This is incredible to her. The properties were worth several hundred thousand dollars apiece and the investor picked them up for less than $10,000 per property. Wow. Now, that is an amazing rate of return, right? Even if the propeties needed a tremendous amount of repair. To find out more, contact the assessor’s office in your area. Thanks for your question. Don’t forget to share this video and follow me on Twitter and Facebook. Until next time. I’m Ilyce Glink.

Pay Per Mile Tax

Here is why I do not support the pay-per-mile tax as a replacement for our current gas tax. The system would likely increase the cost of administration and overhead. Thus, increasing the cost to drive. In 2018, the pay-per-mile tax was piloted. The GPS tracking device installed in vehicles also monitored braking, acceleration and speed. I don’t know about you, but I don’t want government as my backstreet driver. He’s much better company. turn here daddy “Paid for by the Committee to Elect WesCormier, Republican”

Do I Need to Pay Federal Taxes? (Tax Basics 2/3)

Meet Ray. Ray is an incoming senior at State University
who just finished up a summer internship at Corporate Co. Ray had a great experience,
and made a lot of money, so he thinks he might have to submit a tax return. There’s just one problem. Ray has no idea where to start. What should he do? Well, for starters, Ray needs to figure out
whether or not he even needs to file a tax return. While this sounds complicated, it’s actually
quite simple. If Ray’s income exceeds a certain threshold,
he’ll need to file a tax return. Otherwise, he generally won’t. So what’s the threshold? Well, as of 2015, single, independent individuals
with gross income above $10,300 must file tax returns. While that may seems sizeable, keep in mind
gross income includes every major form of income, such as earned income, like from wages
and self- employment, and unearned income, like from investments and interest, so almost
everyone will clear the threshold. But that’s not the only criteria. If you have $400 worth of net earnings from
self-employment, you’ll have to file a tax return, even if you don’t meet the overall
income threshold. Finally, we come to dependents. They must also file a tax return, so long
as they exceed one of the following criteria as of 2015: $6,300 in earned income $1,050
in unearned income, $400 in net earnings from self employment, or, wait for it, gross income
that exceeds the larger of these two criteria: • $1,050
• Or earned income, up to a limit of $5,950, plus $350. We know this may all seem overwhelming. But don’t worry. The IRS actually has a great “Do I Need
to File” Tool that will walk you step by step through this entire process, even covering
scenarios too complex to explain here. But let’s get back to Ray. Where does he fall? Well, Ray is an independent with $30,000 in
gross income, so he’ll definitely have to file a federal and state tax return. The due date for this is usually April 15th,
but Ray can generally start as soon as mid to late January. Finally, even if Ray didn’t meet the income
threshold, he may still want to file a tax return. That’s because if he worked as a traditional
employee throughout the course of the year, income would have been withheld from his paycheck
by his employer, and the only way to get that money back would be by filing a tax return. Hopefully you and Ray now better understand
whether or not you need to file a tax return. Be sure to check out our next video, where
you’ll learn how to actually pay your taxes, and be sure to check out our website, where
you can find more educational material and free recommendations for great tax-filing

Coronavirus – Impact on the Economy | Latest Share Market News | Groww

Friends, you must have heard a lot about Corona Virus You probably would have read a lot about this as well How much it impacts normal people as well But this has another impact which we don’t discuss a lot about That when a virus or illness like this comes How does that impact an economy or an investment Let us discuss in this video The impact of the Corona virus on the economy, the world economy and if I talk about the Indian stock market What are the industries this virus impacts I, Jagdeep Singh, welcome you to the Groww channel Let us start today’s video In which we are going to talk about Corona virus’ impact As a world economy, China’s economy And what are the industries in India that it impacts And how you should plan your investment as an investor When there is an unforeseen event like this Which directly or indirectly impacts the economy If I talk a little about the Corona virus, it is a very different virus that broke out first in China Which first impacted a lot of people in China If I talk about the numbers today, more than 30,000 people are infected by it today And more than 600 people have died because of it But this was its implications on health Now I will talk about how it impacts the economy And any virus attack that happened before this Like a similar virus to this was SARS What was the impact on the economy when that came If I talk about SARS, when it impacted China or the entire world economy That time the cost that was on China to fight against SARS That cost was of 40 billion dollars If I compare that to the GDP That was 1% of China’s GDP at that time Now I will talk about the Corona Virus How is the Corona virus impacting the Chinese economy If I talk about the world economy, the production, then 1/3rd of its production comes from China Which means that China is a very big industry Which manufactures a lot of things and directly or indirectly impacts the world economy a lot In that industry itself if I talk about a very important industry That is automobile industry Now you know that every place has an automobile manufacturing plant Like big companies that make automobiles like Hyundai Jaguar range rover Their production plants are in Europe, in India And in South Korea as well But their main raw materials, main component, the manufacturing of that comes from China Because of the Corona Virus, China was impacted a lot because of which their component manufacturing has come down a lot The direct impact of which has been on these big companies Like if I give you a big example The manufacturing plant in South Korea has been shut down for a couple of days Because their main raw material, component, that came from China That manufacturing of that has gone down a lot After Hyundai another important company in the automobile sector is JLR The main demand of which comes from China and a lot of its units are sold in China There was a very big production plant of it in China Which was closed in the recent days Because manufacturing wasn’t happening well there After the impact of the Corona virus happened in China China’s economy started to go down Because of which, as I have explained to you many times that when the economy goes down The Central bank of that country tries to improve the liquidity position of that country a lot So that demand can be created there again And by creating economic activities, the economy can go up again Because of which China’s central bank also reduced its interest rate But there wasn’t that much of a positive impact on China’s economy Apart from this China’s central bank also infused 150 billion Yuan in China’s economy So that their economy activity can restarted from there But it didn’t have much of an impact After that China’s stock market was opened And after that, China’s stock market went down by more than 8% in one day Which is a record for the past few years That China’s stock market goes down by so much in one day Now you must know that when a country’s economy goes down Its oil demands and requirements reduces Because higher the economic activity That much higher will the oil requirement be and the price of which will increase by that much in the world Because of which there was a slowdown in China’s economy So China has said it’s going to reduce it oil refining by 6 lakh barrels Which means that it will reduce the oil imports Because of which the demand of oil will go down and the price of oil will reduce And this happened as well And if we look at the price of oil today, it has come to 56 dollar per barrel Now you must be thinking was Corona virus the only virus that affected the world economy so much? Was there any epidemic or illness before this that directly or indirectly impacted the world index? I want to explain to you with an example What were the diseases in the past few years What were the epidemics that directly impacted the world index? As you can see on my screen that this graph is from 1970-2020 Which tells you, at different times, When new epidemics came, how did the MSCI world index move Now you must be wondering what the MSCI world index is So if I tell you about the MSCI world index It’s an index for the developed countries to see how the economy is for developed countries So if it goes up then it means that the economic activity is good And when it goes down it means that there is a problem there As you can see on the screen, that when major outbreaks took place Like SARS At that time, the economic activity was very less And at that time, the recession of 2002 was also taking place After this Swine flu came in 2009 EVen at that time the MSCI index went down a lot After that the Zika virus Ebola, and after that a new virus called Corona virus Because of which the MSCI index has gone down a little So this was China, how did this affect China’s economy But what’s most important for us is that we are Indian citizens and Indian investors And we directly or indirectly invest in the Indian equity market So how does this Corona Virus impact us Because I have told you in every video, that micro levels that are company specific How do they impact the company? But macro level factors which can be unforeseen factors Like from that, this is a very important case In that case how does this impact the industry that you are planning to invest If I talk about India then in India there are mainly four industries that China impacts a lot And the names of those four industries are, first, electronic industry Second, automobile industry Third, tourism industry Fourth, aviation industry Now let us understand one by one The Corona virus and its impact on China, how does it impact these industries First, I will talk about the electronics industry If I talk about India electronic goods sector, the raw materials used in that 50% of the raw materials in that is imported from China If there is a continuous problem in China then in the coming days There can be a problem in the electronic good sector Second, I will talk about the automobile sector As I told you sometime back that there is a lot of dependency on China for the automobile sector Because there are a lot of components in the automobile sector that are manufactured in China And after that when they are imported to India, they are used in manufacturing cars So in the coming days if this dependency on China is not resolved So there can be an impact on the automobile sector in the coming days Let us talk about the third and very important sector that is impacted a lot by the Corona Virus And this sector is the Aviation sector As you know that China has a very important place in the world connectivity Apart from that there are many Indians who travel to China Because of commercial purposes as well as tourism purposes But because of the Corona virus a lot of flights were cancelled Not only from India but in the entire world the flights that were operated by China Because of which there is a direct impact on the airlines companies Because their sales directly becomes lesser If I talk about the last sector that is impacted a lot by the Corona virus, that is the tourism sector And not only India’s tourism sector But a lot of countries in the world have been impacted when the Corona virus broke out What I told you about now was what are the sectors this virus impacts and how it impacts the economy But I will come back to a very important question How does this impact you as an investor As I always tell you that whenever you invest in any company You should invest for the longer horizon If I talk about the past, SARS was a virus that came out in 2003 And the world faced a recession in 2002 At that time the world index was very low But after the SARS the recovery that happened, took the market up So if we talk about the impact on investment, it won’t be that much as people expect Because you should see that the company that you have invested in If there isn’t a direct impact on its revenue and on its operations You shouldn’t be scared Because the investment you make, you do it in a proper company by looking at its business If its business doesn’t change, then you shouldn’t be afraid about your investment Instead you should keep those positions And by planning for the longer term you can think about further investments This video we made was purely for educational purposes Because I have made a lot of videos until today In which I have told you about micro level factors If I talk about micro level factors The company that you’re planning on investing in, how does its business operate And understanding that is quite simple to an extent But there are a lot of factors that are in the macro level, and are unforeseen events Like an example of an unforeseen event Which can directly or indirectly impact your investment So whenever you invest not only should you look at the micro level factors Which maybe you have started to look at already But when news like this comes out, we should learn from that as well That unforeseen impacts like this can impact our investments as well So this video we made was purely for educational purposes So that you can get an idea that these kinds of news Can impact your investments or your economy We will end today’s video with a question for you The next video we bring out will be a stock analysis, comment and let us know Which stock we should analyse If you haven’t yet subscribed to this channel, please subscribe Because we put up 2-3 videos every week on this channel for educational purposes Which can help a lot for you to become an intelligent investor Like our video, comment and answer our question And subscribe to our channel Happy investing!


Budget 2020 has been presented in a very difficult Economic Situation A flat tax rate without exemptions, new slabs for those earning higher incomes, cuts in personal income tax in line with those in corporate tax; The finance ministry present arguments for and against tax cut or slab change before a decision was taken at the highest level, a government official said.

Sales and Use Tax: Filing and Paying a Sales & Use Tax Return

Filing and Paying a Sales & Use Tax Return In this video, you’ll see how to file a sales and use tax return. This screen lists the approximate start time
for each topic. To view a specific topic, use the controls
on your video player to move forward to the time listed. To begin, select the File Return link for
the period you are required to file. Gross Receipts Gross receipts are the total amounts your business received from all sources during
its accounting period, without subtracting any costs or expenses. Gross Receipts include taxable and non-taxable
sales, exempt sales, leases, and rentals sourced in Minnesota. Don’t include sales tax collected in Gross
Receipts. Enter the total gross receipts of all business
activities sourced within Minnesota in the Gross Receipts for Location 001 field. My business has $34,123 in Gross Receipts. Don’t enter commas, periods, or cents. Use whole dollar amounts and round to the
nearest whole dollar. You’ll report your taxable sales and purchases
in the Enter Taxable Sales and Purchases section. Taxable Sales and Purchases On line 100, general rate sales tax, in the
amount column enter your total taxable sales, leases, rentals, and services subject to Minnesota
general sales tax. Don’t include non-taxable sales or sales
tax collected in the amount. Make sure to enter the taxable sales and not
the tax collected. My business has $34,123 of taxable sales sourced
in Minnesota. I’ll enter 34,123 in the amount column for
line 100. After I complete the amount field and press
enter, the tax due will calculate automatically in the Tax Due field. The amount column is multiplied by the tax
rate to calculate the tax due. In this example, $34,123 multiplied by 6.875%
results in $2,346 of tax due. Notice the tax due column is rounded to the
nearest whole dollar. On line 200, Use Tax Purchases, enter the total purchases subject to Minnesota Use Tax
in the amount column. Use tax applies when you buy, lease, or rent
taxable items or services used in your business without paying sales tax to the seller. Use tax may be due when you bring items into
Minnesota or when you take items out of inventory. Use tax is also due if a seller does not charge
Minnesota sales tax on taxable items. See Fact Sheet 146- Use Tax for Businesses,
for additional information. My business bought $633 of office supplies
online from a vendor that does not collect Minnesota Sales Tax. I’ll enter 633 in the amount column for
line 200. The tax due will calculate automatically after
I move to the next field or press Enter. The amount column is multiplied by the tax
rate to calculate the tax due. In this example, $633 is multiplied by 6.875%
for use tax due of $44. On line 210, Variable Rate Purchases, enter the total purchases subject to a variable
rate in the amount column and calculate the tax due manually to enter in the tax due column. Use the variable rate to report use tax on
purchases you made when the vendor only collected some sales tax but not the full General Rate
of 6.875%. See Fact Sheet 146- Use Tax for Businesses,
which has additional information when variable tax is due. I don’t have any variable rate purchases
to report, therefore I’ll leave the zero in the amount and tax due columns. If you’re registered for additional sales and use taxes, such as local or special taxes,
they’ll also appear on the return. See our website for additional information
related to local, other, and special taxes. There are fact sheets and industry guides
available to review for rates and when to apply the tax. Adding a Tax Line to Your Return. You must add additional tax lines to your Sales and Use Tax return if you’re required
to collect, report, and pay local or special taxes that are not already displayed on your
return. This includes any local taxes, special local
taxes, vehicle excise taxes, or goods and services taxes. In addition to adding taxlines directly from
your return, you can also add local taxes by managing your sales locations in e-Services. For more information, see our “Adding Local
Taxes” video. To add a tax line to a current return, select
the Add a Tax Line link at the bottom of the return. A new row and a drop down menu appears. Scroll through the list to select the tax
line you need to report. I want to add Hutchinson Sales since my sales
are sourced in Hutchinson. Enter the total amount of sales subject to
the local tax rate in the amount column. All of my sales took place in Hutchinson so
I’ll enter 34123 in the amount column. The tax due of $171.00 calculates automatically. I also need to report additional local taxes
for Hutchinson on the purchases entered in line 200. I’ll select the Add a Tax Line link again. I’ll select Hutchinson Use from the drop
down menu to add the tax line. Enter the total amount of purchases subject
to the local tax in the amount column. All of my purchases are used in Hutchinson
so I’ll enter 633 in the amount column. The tax due of $3.00 calculates automatically. Some areas have more than one local or special
tax. If you have sales or use tax due on multiple
tax lines, you must enter the total amount of sales or purchases on each applicable line. Tax lines you add will appear on your sales
and use tax returns going forward after the current return has been processed. A Summary of Your Return The amounts entered on the previous screen
are summarized to total the Gross Receipts for all locations, Taxable Sales for all locations,
and Taxable Purchases for all locations. If you need to make any edits, you may select
the View/Edit – Return Information link. A pop up screen appears to make any necessary
edits. The tax for all taxable sales and purchases reported are combined on the Tax line. If any payments are made prior to completing
the return, the credits appear in the Deposits and Credits line. If you’re filing and paying the return late,
projected penalty and projected interest calculates automatically. For more information on penalties and interest,
visit our website and enter the keyword “Penalty” in the search box. The projected amount due line calculates a
total of the tax, penalty, and interest, less any credits. During the filing process if you need to return
to a previous page, select the Previous button. Don’t select Back within the e-Services menu
or use the back button on your browser to go back within the return. This will cause you to lose any unsaved progress. The Next button advances you to the following screen. If you’ve made an error within the page,
you won’t be able to advance until you fix the error. The Cancel button will delete any progress and return you to the last screen you were
on before opening the return. When you’re filing a sales and use tax return, if you’re not ready to submit your return
you can save it by selecting the Save and Finish Later button. When you select this button, e-Services will
save the information you have filled out so far on the return. The return is not submitted to the Department
of Revenue and you will need to finish completing the return and submit the return within 14
days of selecting this button. After 14 days, the saved return expires, and
you’ll need to start the filing process over. If the information is correct, select Next. Making a Payment When Filing The projected amount due displays and asks if you’d like to make a payment. If you don’t select to make a payment online
with the return, a notice displays indicating no payment is being submitted with this return. I’ll make a payment with this return by
selecting Yes from the drop-down menu. Answer the question that asks if funding will
be transmitted to or received outside of the United States. The Department of Revenue does not accept
electronic payments from a bank located outside of the United States. See our website for additional payment options. Enter your bank information. The information we use in this example is
fictitious. When making a payment and entering bank information,
you can save the bank information to be used again in the future. To save the bank information for future use,
select Yes. When you save bank information in e-Services,
you must give it a name. By default, it’s the name of the bank followed
by the last four digits of your account. If you want to change the name, select No
under “Use default bank name”. When making a payment while filing a return,
the projected amount due displays in the Payment Amount field. You must confirm this amount by entering the
payment amount in the Confirm Payment Amount field. The Payment Date defaults to today’s date. If necessary, you can change it to a date
in the future by using the calendar icon in the Payment Date field. The Return Summary, Projected Amount Due,
and Payment Information are displayed. If you made a payment for the full amount
due, a projected balance of zero displays. To submit the return and payment, select Submit. The confirmation page displays and includes
a confirmation number. Your payment has been submitted and your banking
information has been saved. The next time you make a payment with this
account, you’ll be able to use your saved banking information. Payments generally take 3 business days to
process and to post to your account in e-Services. The processing time to submit to the bank
starts on the date you select. Postdated payments are submitted to your bank
on the next business day after the date you select. The Printer Friendly button prints the web
page with the confirmation number. The Email Me button sends an email of the
confirmation page to your e-Services registered email address. The Print Return button prints a copy of the
return including each tax line. The print options will generate a pop-up screen. The Close button returns you to the main menu. If you need additional assistance with pop-ups
or other areas in e-Services, see our help page by selecting the Menu above.

Earn more money, pay less tax | Money matters | Touchstone Education

– Hello, welcome. Today, I’m going to show
you how to earn more money and pay less tax, sound good? (upbeat music) You’re all probably
sat out there thinking, ’cause everybody does think this, the more money I earn, the
more tax I’m going to pay. And I understand exactly
why you would think that because that’s how
you’re trained to think. You are trained to believe
that once you earn more money, then you can earn, as a
20% tax payer, you pay 40%. And then when you go over
150,000, whoa, whoopee! Now you’re going to pay 45%
and you’re going to lose all your allowances. And you’re going to carry on
paying national insurance, you’re going to be paying
53% tax at that point. You’re actually now not
working for yourself or anybody else, you’re
working for the government because you’re giving 53%
of your money to them, and I don’t want you to have to do that. It’s your legal obligation to
pay the correct amount of tax and set the appropriate
measures to optimize that tax. I’m not talking about tax
avoidance or tax evasion, I’m talking about managing it. If you don’t have the tools, you can’t. So this isn’t a complete
everything you need to know about tax, this is specifically
what you need to know to make sure you’re not
paying too much tax. So, I’m going to take a situation
where we’ve got a person and they’ve got a job, but it could be a job or it
might be that they’ve got, they’re self-employed but
they’re paying some sort of national insurance and
tax based on an income. But for the purpose of this, I’m just going to assume it’s PAYE, but it could be if they’ve got
their own business as well. And I’m going to say this
person, we’re all different, aren’t we? I’m going to say they’ve
got 60,000 pounds PAYE, pay as you earn. So that’s going to put them into
the higher rate tax bracket, they’re going to be paying 40% income tax, they’re going to be
paying national insurance, they’ve got various taxes. So what they take home,
this is a nice simple number to work with in the sense
that it’s five grand a month. And it’s more than twice
the national average, so if you’re sitting out
there listening to this and you are earning
60,000 pounds, well done! Because you’re actually earning
double, more than double, the national average. But you will know if you get
paid 5,000 pound a month, by the time it actually
gets into your bank account, it’s an awful lot less. Now, I can’t tell you
precisely on this video what it’s going to be because
you’re all going to have an individual tax code. Now that tax code is the amount of money that you’re allowed to
earn before you pay tax, and it’s got various factors in there, so you will have an individual tax code, and it’ll just say it. It’ll like end in a K or something and it’ll be on your payslip. So you’ll be able to see
all of these numbers. So the first practical
exercise that I want you to do is I want you to go and
get out your payslip and make sure you understand it. ‘Cause it’ll have all the entries on it and if you’re getting given
an amount of money every month but you don’t know what it means, and if you’re just focused
on your gross and your net, and if you just know that
you’re on 60,000 pounds a year and you take home 3,500 or something, or 3,200 or whatever it is, I know you’ll know those
numbers ’cause that’s what hits your bank account every month. But I need you to
understand it more than that ’cause I want you to split
out the various kinds of taxes you’re paying, and I want you to understand
why you’re paying them. Because income tax is
something that can be managed. National insurance, which I just realized I haven’t finished there, I don’t actually regard
national insurance as a tax. And I would want to go out of my way to make sure I did pay
my national insurance. More of that later, but in order to get your old-age pension, you actually have had to have
paid your national insurance for a minimum number of years, and the more years you pay it
for, the more pension you get. So national insurance, for
me, isn’t really a tax. You’re paying money now so
that you can have a pension, a state pension, in old age. So this is all happening over here, and you’ve got it on your payslip, so your first job, get out your payslip and make sure you understand
the various types of tax. Now, what we’re going to do
next is we’re going to go and start to buy some houses, we are going to have a property business, and this is my first and strongest advice, make sure you understand
the tax implications of whatever you’re doing with property. ‘Cause properties can, very
quickly, start giving you significant passive incomes, and if you don’t know how to
manage the tax implications of that, you’re going to end
up paying far too much tax. And I’m sure you’d agree with this, it’s not about what you
make, what your income is, it’s about what you keep. Like they say in golf, for instance, you drive for show, but you
actually putt for dough. So it’s not about the big
flashy, top line number, oh, I’m on 300,000 pounds a year, that’s not the correct way to measure it. The way to measure it
is well, how much money goes in your bank every
month after you’ve paid for all your taxes and
insurances and everything else? So for the sake of this
example, I am going to say that we’ve got a property business, and I am going to say
that we’ve got a number… I’m going to pretend that
you’ve been doing this for, I don’t know, four or five years, and so you’re maybe four years
into your property business, and each year, you’ve done the courses, you’ve had the education,
you’ve learned how to do it, and each year you’ve bought
two houses, or flats, or something, or whatever. And then, as you got more advanced and you understand there’s more options. See, by the end of four years,
you’ve got eight buy-to-lets, but you’ve also done a
couple of commercial deals, so I’m going to say they’re shops, but you’ve only been doing
that for two of the four years. So you’ve got eight buy-to-lets
and you’ve got four shops. And I’m trying to be very realistic here because if you’ve been a
property investor for four years, is it possible that you end
up with eight buy-to-lets and four shops, you bet you it is. So what kind of money are
they going to be producing? How should you own them and
how should you manage the tax? So for buy-to-lets, I want
you to seriously consider putting them into a limited company. So in your limited company, you’ve got your eight buy-to-lets. Hope you’re following all of this. But shops are commercial. These are residential, so if
hear people talking about resi, they’re short-handing it for residential. So what they mean by residential, they mean where somebody lives. So a flat or house or a
HMO, something like that. But then separately, I actually
want you to have a pension that owns the four shops. Now, for the sake of this argument, I actually don’t mind whether this pension is a SIPP or a SSAS, and
don’t get yourself all het up about that, these are
just two different kinds of private pension and I’m not
going to talk about that today. Just going to keep it nice and easy. But you’ve bought four shops,
you’ve put them in there. Now, in terms of money, what
are the buy-to-lets doing? Well, the buy-to-lets I’m
going to say are producing an average of 250 pound a month each. So you’ve got 250 times eight,
which is 2,000 pound a month. There’s obviously 12 months in a year, so your buy-to-lets
are producing an income of 24,000 pounds a year. That’s profit after all costs. So you’ve taken in some rent,
you’ve paid the mortgage, you’ve paid a letting agent, you’ve done whatever you need to do, and after everything, it’s
realistic to expect a buy-to-let to give you about 250 quid a month. But you’ve got eight of them. And you might be off
on some other strategy, like you might doing
service accommodation, you might be doing tenant buyers, you might be doing rent-to-own, but I just want to keep
it dead simple for today. You’ve got 24,000 pounds a year profit from that limited company. In addition, you’ve got
four shops over here, they’re just nice little shops. What they’re doing is they’re
producing 1,000 pound a month, each, but you’ve got four of them, and that’s giving you
4,000 pounds a month, or 48,000 pounds per annum. So, suddenly, you’ve gone from
just having 60,000 pounds, you’ve got an extra 24 grand of profit from your buy-to-let business, and you’ve got 48,000 pound
a year in your pension. Does that sound like a nice
place to be four years from now? And do you think you need
to know how to manage those income dreams so you
don’t pay too much tax? And would you be somewhat shocked to learn that if you manage this properly, despite the fact that you’ve actually got more money coming in, you can actually pay less tax over here? ‘Cause most people think they’re
going to do some properties on the side or whatever, they never actually
think, in my experience, well, how can I use all of this to reduce my tax bill in my day job? They never think that. And it’s very wise, by the
way, in the early years of being a property
investor to have a day job because it makes getting mortgages for all this lot a lot easier, because you’ve got 60,000
pounds, happy days! Okay, so how do we manage this? First, and this is going
to sound counter intuitive, but I want to just take
the top line numbers and share the principles, and I’m not going to go
to the fifth decimal place ’cause I just want to keep it easy, I want to share the principles. What I want you to do is
take some of your PAYE money and actually pay it into your pension to buy all those shops with. And let me talk you through that. You would set up a SIPP or a SSAS, I help people do it all
the time, it’s very easy, and it doesn’t matter if you haven’t got any pension right now. ‘Cause three quarters
of this country of ours doesn’t have a pension, and
I find that quite scary. Three out of four of us
don’t know how much we’re going to live on in retirement, can’t tell anyone that asks
them what their plan is for a pension, and it’s
just all too difficult, all too hard, and we don’t do anything. But imagine how nice it
would be to have four shops giving you a thousand pound a month each, 48,000 pound a year pension. Is that achievable three,
four, five years from now? Yes. Might it take you five
or ten years? It might. But one thing’s for sure,
if you don’t start now, you’re never going to have any. Very simple process to set it up, there’s a number of providers
that’ll do it for free, and it can be done within a
matter of six to eight weeks. That’s how far away you are
from having a pension set up. Now, the maximum that
you’re allowed to put into a pension every year, and I want you to put in
as much as you can afford, but I’ll tell you the maximum. The maximum is 40K per
annum, 40,000 pound a year. But in terms of the impact that would have on your take-home salary, they’re giving you the tax back. So every 10,000 pounds you put in there is only going to cost you six,
if you’re a 40% tax payer. So, you’re not quite getting
double your money, but nearly, and if you’re a 45% tax payer, you are very close to
getting double your money. So, for every 60 pence,
as a high-rate tax payer, that you put over here, you’re
going to get 40 pence tax back. That’s powerful. And you’re building for your future, and essentially I want
you to ask this question, instead of having six
pounds of income now, or 6,000 or 60,000, or whatever, now, would I rather have 10 pounds, or 100,000 pounds, when I retire? And I’m now, I’m a pensioner
by the way, I’m 55, so I can actually draw my
SIPP or my SSAS if I want to. ‘Cause most people think they can’t retire until they’re 67, 68, whatever it is, and even then they can’t afford to. Well, I can afford to retire
now ’cause I’ve been doing this for 15 years. But this is realistically
achievable over that time frame. So, by putting 40,000
pounds a year over here, you’re actually going to
be getting, effectively, 16,000 pounds of that is tax back. So it’s not going to cost your
40, it’s going to cost you 24. And there’s a reason why
I’ve done it this way, this is not an accident
that I’ve used these numbers as examples. So the next cost to you if
you put 40 from there, there, is not 40, it’s 24. Which is remarkably similar
to that number, isn’t it? In fact, it’s the same. So what you’re doing here is
you’re giving up PAYE income, which is the most tax
inefficient way to earn it, you’re putting it into
a pension where your 24 suddenly becomes 40, and can you go and buy a
shop or something for 40K? Well, I don’t want to go
too far into it today, but you don’t need to
because whatever you’ve got in your SIPP or your SSAS, not you, but the SIPP or the
SSAS can borrow an extra 50%. So the 40K here, it can
take a mortgage, not you. So your 40K becomes 60. So can you now go and buy, because you put 40,000
pound a year in there, I said four shops, that
wasn’t an accident either ’cause you done it for four years, yeah? So you’ve put 40K in, but then each year, you’re adding a 20K SIPP
or SSAS mortgage to it, which is how I’m getting
to my 60,000 pounds. Can you buy a shop for 60,000 pounds, or an office, or a factory,
or a warehouse, or a whatever? The answer is yes, you can. These numbers work, how do I know? ‘Cause I’ve got loads of them. So you can use your tax-free
income to put into a pension that can then go and start
earning money off of shops, or offices, or industrial
property, or warehouses, or garages, or I don’t
know, whatever you want. That then, so this is,
you’ve got four of them, and that’s how much they
give you every month. And this part of it is completely
incredible, blows my mind, and I’m so pleased to be
able to share this with you. It’s insane, still, even now, 15 years after I started doing it, that 48,000 pound a year, 0% tax. That’s pretty tax efficient. And I’m now at the stage where I’ve got, well, I’ve got more than that, but it doesn’t matter what I’ve got, I’ve got a full-up pension fund. And because I’ve been doing
it for enough years, 15, very quickly your annual income, I’ve said you’re four
years in in this example, your annual income from the shops, well, you could even stop
putting the money in now, even that income on its
own, borrow 50% more, that’s enough to buy a shop with. So you’ve now kitted out a pension scheme with enough residual income
that you can just reinvest it every year and get another one. So, it’s 0% tax plus one free shop. So you’re adding one free shop every year, because you put some money in, you’ve got a big tax
credit ’cause you’re making pension contributions, that’s all tax free ’cause
it’s inside a pension, and then you’ve now got
it to a critical mass where it just, it’s like a
snowball going down the hill, you’re getting a free shop every year, which means that goes up every year. And you’re all stood out
there thinking this is insane, what’s the catch? That’s the catch right there,
you didn’t know about it. This is the biggest kept
secret, this is the… Pensions, if you said to me
Paul, in this country of ours, what is the biggest scam? I would say pensions, because if you put money
into a pension scheme and you don’t know all this stuff ’cause you haven’t educated yourself, ’cause they don’t teach
you at school, do they? Come on, I can see you
all through the lens, show me your hand if you did a class on commercial property
investing, using pensions, in school. No hands, didn’t think so. The most you can put
in your pension scheme is just over a million. So it’s currently a million and 40,000. Now let’s say you’ve
put a million and 40,000 into your pension scheme, and you retire, ’cause this’ll be ridiculous, that’s like 10 times the national average. But I want to show you
how massive a scam it is, even if you done that. ‘Cause people say to me oh,
define benefit pensions schemes, final salary pensions schemes, they’re the best you can
have, they’re not, in my view. Because you take a million quid, put it into something called an annuity, that’s what the pension
fund will buy for you when you retire, so effectively, you give them the money, put it into an annuity, and
the annuity will pay you about 3%. So that means your million pounds, you’re going to get a pension
of 30,000 pounds a year. That’s lunatic! You’ve got to live 33 years
to get your money back. ‘Cause when you die, that’s gone. You’ve lost it, nothing for the kids. So if you retire at 67, you’ve
got to live to 100 years old to get your own money back. Now if that’s not a scam,
please tell me what is. But that’s the institutions,
that’s the system, that’s what we’re all
told to do, it’s insane! So, you’re thinking well,
fine Paul, that’s fantastic, but I can’t afford to take 40
grand of my 60 grand salary and stick it into my pension
to buy my shops with, I’ll be skint, the kids will be hungry, no holidays in Marbaiya,
I’ll have to sell the car, or whatever, some version of that. Well, why do you think I’ve
got you invested in buy-to-lets in the first place? So it’s costing you a net 24 grand, you’re making 24 grand over here, extra. So how much is this actually costing you? Nothing if you know how to structure and put it all together in
terms of pieces of the jigsaw. But now you’re saying well, Paul, how do I get my 24 grand
profit out of there? I’m going to have to pay tax on it. Yes, you are. So what kind of taxes are
you going to have to pay on that 24 grand? Well, if you made a profit, I mean, there’s a whole level
of other sophistication, but this is just the really basic stuff. This is the really basic stuff, because can you reduce
that profit, for instance, by charging your car mileage against it? Yes. How much are you allowed
to charge, 45 pence a mile. How many miles a year, 10,000,
that’s four and a half grand. So you could reduce your taxable profit by claiming 4,500 pounds for motoring. And if, as a property
investor, you’re driving about looking at properties and
considering investment areas, is that a legitimate business
mileage, of course it is. Now, please tell me where you
can go in the United Kingdom without seeing a house,
or a shop, or an office of some kind, ever? So could you be doing
research, legitimately, on different areas? And this all needs to be
legitimate, of course. What else could you do
to reduce the profit? So, I’ve talked about car
mileage, let’s write that down. 45 pence per mile, maximum
10,000 miles a year, and that’s per person. So that’s you and, I
don’t know, your partner, your misses, your fiance, whoever, boyfriend, girlfriend, don’t care, as long as they’re part of the business. Board meetings. For years and years and years
I was a senior executive in a big company and we
used to have board meetings. Not every month. 80% of the managers, or
the directors, sorry, that were part of my board
would live in the UK. The only place we never had
a board meeting, the UK. We would go to Singapore
or New York, or wherever. Is that a legitimate
business expense? Yes. Could you extend and
have a few days holiday while you were there, after
your board meeting? Yes. Could you be thinking about
doing service accommodation in Marbaiya, yes you could. So is there a legitimate
reason why you might have a board meeting over
there, and tag on a holiday? So I don’t want to go into that today, there’s loads of ways
you could reduce that, but let’s say you’re
making a profit of 24 grand after you’ve used legitimate strategies to reduce the profit. Well, I don’t want you to pay
that to yourself as salary because you’ve already
got a salary over here, you’ll kick straight into
40% tax, no, don’t do that. And the company will have to pay employer’s national insurance. You will have to pay
employee’s national insurance, you’re just going to get
taxed to kingdom come. You’re going to lose half of your money. So that 24 grand, I specifically want you to pay it to yourself as a dividend. And this is as complicated
as I’m going to get in this video today. But I want you to understand,
you have to understand, the essential elements of dividend. So a dividend can only
be paid from profit. So you’d actually have to
declare a profit in the company of 24 grand. And that means that you’re
going to have to pay corporation tax, so not income tax, yeah, I know, by now your head’s spinning. Another tax, oh, what’s all this? Corporation tax. Well, corporation tax, this year, is 18%, but next year it’s dropping to 17%. So let’s say, for this
example, 24,000 profit, going to pay 18, next
year 17, so it will be 17 by the time you actually do this, ’cause this is in four
years time, isn’t it? So what’s 17% of 24? Well, 20% of 24 would be 4,800, so 17% is roughly 4,400. I haven’t got a calculator,
I’m just doing it in my head, but it’s four and a half grand. Now you can pay dividend. So from your 24, you’ve
got roughly 20 left that you can pay yourself as dividend, so this money now goes
back that way, to you, ’cause you’ve given up some
of that to go in there, yeah? You got that. That’s building a pension for the future. You’ve supplemented it,
you’ve replace it there, and I’ve made the numbers the same. I can’t make them exactly the same ’cause I’ve got to take the tax out. So, you’ve got 24 profit,
pay your corporation tax, bar a few hundred pounds,
you’ve got 20K left. So now, back into your personal
bank account as a dividend, you’re going to pay 20,000 pounds. How much tax do you pay
on that, personally? Well, you are going to pay the
first 2,000 pounds of dividend equals nothing, it’s tax free. Now, I’m keeping it
simple, there’s one person in this example. But let’s say you’ve
got your wife in there and two of your adult children. This 2,000 pounds is per
shareholder, per year. So if there’s four of you, you could be pulling out
8,000 pounds tax free every single year. You can’t make this stuff up. Of that dividend, you
are going to pay 7.5%. So 7.5% on 18K. Well, 10% on 18K will be 1,800, 7.5 is three quarters of that, so you’re going to be
paying about 1,300 pounds, so you can give yourself
20,000 pounds of income and your tax is going to be at 7.5%, and again, in my head,
I might be 100 quid out, I think it’s about 1,300 pounds. So you’re total tax bill is
about four and a half there, one and a half there, it’s
going to be about six on 24. But if you just push that
through as a 40% tax payer, it’ll be more than double that. So your tax efficiently
using your PAYE money to build your pension
to buy shops and stuff, which you’re going to
save for your old age. You’re using your limited
company to replace the income that you’re putting into your
pension, so it’s almost free. So I got a question for you. Hopefully I haven’t, looking back on it, it looks a bit complicated now. But that’s the easy version. So my second action, my
second activity for you is I wanted you to go and
check out your payslip, and make sure you
understand all the numbers, that’s number one. Number two, I want you to
go and find out about SIPPs and SSAS’s ’cause you can’t
do this unless you know what a SIPP or SSAS is
and you get it set up. Number three, and
perhaps most importantly, I want you to ask yourself a
question, and the question, so your third and most important action, if you want to take an action from me, is why you haven’t done this already. And what, specifically, are
you going to do about it? But first, I want you to
understand why you haven’t done it. I know you can do it, I’ve done it, I train thousands of
people every year to do it. I’m going to give you the two
reasons that will stop you from doing this. I really hope you’ve
found this video useful. The two things, in my
experience, that you have to have in order to make this happen. Number one, knowledge. As a wise man once said,
“Information is not knowledge.” All of this stuff is in the public domain. All of it’s available on the internet. Well, if information is all you need, then surely to Christ
everybody would have done it. So information is not knowledge. So I need you to equip
yourself with knowledge. And if you did that, if
you were tax neutral here because you had some
buy-to-lets replacing the income that you were putting into your pension, but you built a million pound pension fund by the time you were 55. My pension fund yields
an average of 12.5%, which is more than 125,000 pounds a year. So my pension gives me more
than 10,000 pounds a month. And if you can gain a pension
of 10,000 pounds a month without it costing you anything, and instead of getting it destroyed by putting into an annuity, you’ve still got the
million and 40,000 pounds, and the income through the
shops that it’s throwing off is 125 grand a year,
it’s 10 grand a month. Think of what difference
that’s going to make, because when you die and you
will, I’m sorry, at some stage, what happens to that pension fund? Goes to your kids, it’s
not like an annuity. You keep it, your family keeps it, it goes wherever you want it to go. So the biggest question I want you to ask is why you haven’t done it. And I know what it’s going to
be, it’s going to be knowledge, so go and get the knowledge,
go and invest in yourself to get the knowledge
to be able to do this. Second thing you need to
do is take some action. So those are your three tasks
if you want to take them on. You’ve been wonderful, I’ve been Paul, hope you enjoyed it, see you soon. If you’ve like it,
please literally like it, subscribe to the channel, get
your friends to do the same. You’ve been wonderful, I’ve been Paul, see you next time, bye-bye.

New to Australia: Paying tax and super (English)

VOICE-OVER: This is Ahmad, he was born in
Afghanistan. Ahmad has only been living in Australia for
three years. When he arrived as a refugee, he was overwhelmed. Ahmad is very grateful
to be here in Australia, a place where he feels safe…Although there are times when
he misses his home. AHMAD: Not long after I arrived in Australia,
I learnt some basic English through some settlement classes. I wanted to be a part of Australian
culture. I wanted to start a new life here in Australia. VOICE-OVER: In one of the settlement classes,
he learnt about Australia’s tax and superannuation systems. He is happy to pay his fair share
of tax in Australia because the money collected is used by the government to build roads,
fund hospitals and other community services. It goes back to the people, and it is invested
into the country’s future. In Australia, generally you must pay tax on
money you earn, or the income you get, from working, running a business, receiving government
benefits such as Centrelink payments and from investments.
Although Ahmad is not an Australian citizen, he meets the tax definition of residence as
he has been living here for more than six months. Because of this Ahmad will pay tax
as an Australian resident. Ahmad had never heard of a Superannuation
system, or super as it is often called, which is money put aside by your employer over your
working life to live on when you retire from work.
He now knows that his super is important because the more super he saves, the more money he
will have for his retirement. Ahmad can also contribute to his own super if he has any
spare money. There are a lot of new things to learn when
settling in a new country and there are many ways to get the information you need.
For tax and super information, a good place to start is the Australian Taxation Office,
or the ATO website, which has a lot of information in a range of languages.
You can also call the interpreter service if you need help in a language other than
English. AHMAD: I feel a lot more settled than when
I first came here. But I am more excited about living, working and building a future here
in Australia

How does UK Tax work? – What you need to know about HMRC & PAYE

I get asked a lot about tax codes and how
tax works so we’re going to tackle this topic here and explain it with some quick
examples. Tax in the UK can be a bit tricky to understand
and there are lots of confusing headlines and stories out there to bamboozle you. This
is a basic guide to tax in the UK, check out part 2 if you want to know more about how
taxable benefits such as company cars or medical expenses work.
We are going to discuss personal tax from earnings. Let’s start at the top; HMRC.
HMRC – which stands for Her Majesty’s Revenue & Customs – is the department of the
government responsible for collecting taxes. This is what people mean when they talk about
‘the taxman’. These are some of the types of tax HMRC covers:
VAT Income tax
National Insurance Corporation tax
Capital gains tax Motoring taxes
Inheritance tax Stamp duty
Insurance Premium Tax Air Passenger Duty
PAYE It’s a long list! In this video we are only going to look at
PAYE. PAYE – or Pay as You Earn – is a type
of income tax. It is the amount that is automatically deducted from your salary on your payslip
each month, before you even get a sniff of it.
HMRC gives you a tax code. We’ll discuss tax codes in a minute.
Your tax code determines how you will pay tax and your employer uses your tax code to
deduct the correct amount from your salary each month and give it to HMRC.
PAYE is applied to your normal salary, sick pay, maternity pay, directors’ fees and
pensions. Tax codes. A tax code is usually in the form
of a number followed by a letter and it is a calculation of how much tax you need to
pay in the tax year. You can find your tax code on your payslip or P60 (which we’ll
come back to) and on the letter they write you at the start of each tax year.
Tax codes are calculated as follows: The tax-free allowance for everyone is currently £11,000 This means you can earn £11,000 before you start to pay tax.
This gives you the tax code 1100L which is what most people receive.
Ok, for this example we are going to use this tax code. We will look at how your tax code
can change a bit later. Once you earn over £11,000, you are taxed
at the basic rate. This is currently 20%. So if you earn £20,000 per year, you pay
tax on £9000 at a rate of 20%. This means you pay £1800 tax per year, or £150 per
month. Your employer deducts this automatically from your payslip – hence the term ‘pay
as you earn’. If you earn £30,000 per year, you pay tax
on £19000 at a rate of 20%. This means you pay £3800 tax per year, or £317 per month. Higher rate tax is paid on income above £43,000.
So if you earn £50,000, you will pay: Zero tax on the first £11,000 as above, 20% tax on your income between £11,000 and £43,000, This is £32,000 at 20% which equals
£6400. And you’ll pay 40% tax on your income above £43,000. This is £7,000 in this example which equates to another £2800 in tax. This brings your total tax bill to £9200 or £767 per month. I’ve heard people get this mixed up and think that as soon as you enter the 40% tax
bracket, all your income is taxed at 40%. This is not how it works. The higher rate (40%) tax bracket applies all the way up to £150,000. Above this point
you will pay 45% on your income. Also, if you earn above £100,000, your tax
free allowance diminishes proportionately to zero. If you have any questions about this,
leave them in the comments below but for now, we will assume that most people watching this
channel aren’t worried about this problem. To calculate your tax just remember this; If you earn more than £43,000; the proportion above this amount times 40% and the remaining amount between the two thresholds, – which is £32,000 – times 20% So what if your tax code is not 1100L?
I’m glad you asked. Your tax code may have a different number or a different letter.
We are going to cover this in part 2. Don’t forget to subscribe.
Remember, the figures used in this example are based on the tax year 16-17 and will likely
change from year to year. The basic concept remains the same though. Further information
is available from the HMRC website.


would you believe me if I told you that
Warren Buffett pays less tax than his secretary you may wonder how a
billionaire pays fewer taxes than an average income earning secretary and the
answer is that there are two kinds of taxpayers those who accept taxes as a
natural part of life and pay whatever the government tells them to and there
were others who do everything in their power to avoid paying taxes let’s give
each of these types of people a name we will call the willful taxpayer Paul and
the tax avoider Jack to Paul when the government comes knocking at the end of
the year he doesn’t see it as a big deal earning $40,000 a year
Paul hands over his $15,000 worth of income taxes and moves on about his life
sure he would love to keep more of the $15,000 but he sees paying taxes as a
normal part of life jack on the other hand is a medium-sized business owner
who draws himself a salary from the tech company he owns and built from scratch
jack has over 50 employees working for him and has seen his business grow
year-over-year unlike Paul Jack despises tax he thinks to himself how can the
government who played no part in making his business’s success take such a huge
chunk of his money for nothing to make matters worse being taxed personally and
by being a business owner jack is subject to just about every tax
imaginable such as personal income tax sales tax excise tax property tax and
investment tax with all these potential taxes being applied to his income Jack
decided to look into how big corporations avoid paying taxes after
hearing that in 2018 Amazon paid zero income tax even though
they earned over two hundred billion dollars in revenues that year determined
to avoid losing a sizeable chunk of his earnings to tax Jack looked into ways he
could cut down on the amount of corporate tax his business pays and
reduce his own personal tax bill in his hunt for tax strategies Jack came across
the following techniques method number one riding off expenses given that most
rich individuals earn their fortunes through a business this gives them the
opportunity to write off expenses and their taxable income you see most
expenses you occur in your day-to-day business operations can be written off
against your income to lower your taxes payable for example let’s say you run a
digital marketing agency and are in $200,000 a year in revenues if you had
no expenses then the whole $200,000 would be subject to tax however as most
businesses incur expenses these costs will reduce what amount of profits will
be subject to tax for instance if you have $100,000 worth of legitimate
business expenses a year then this would make your annual profit $100,000 instead
of the $200,000 you earned in revenue which would cut your taxes paid on your
earnings by more than half eligible expenses can include things
like business meals office supplies new laptops internet connections etc
employee benefits staff training rent and leases car expenses etc as the owner
of the business if you decide to take a trip for a conference to develop your
skills in digital marketing you can decide to write that off as well
again this method of reducing your taxes is only enjoyed by people who own
businesses leaving little wonder as to why most people who own businesses seem
to be considerably richer than people who work as employees method number two
diverting income as of 2017 the United States corporate income tax rate was
reduced from thirty five percent to twenty one percent and while this
offered many companies Amazon included the opportunity to significantly reduce
their income tax payable many companies still elect to recognize their income in
countries with even lower tax rates for instance the Cayman Islands has no
income tax no corporate tax no estate or inheritance tax and no gift tax or
capital gains tax making it a pure tax haven in short whatever you earn you
keep of course without any calculations it is obvious that this is the
significant savings to any business who can realize their income overseas but
just how much would this save you if you had set up a tax haven in this country
let’s say your business earned five million dollars last year instead of
paying an income tax of thirty five percent for 1,750,000 dollars you would
instead pay nothing and keep that almost two million dollars for yourself besides
allowing you to realize income tax free the Kane
have very strict banking laws designed to protect banking privacy the country
does not have any tax treaties with other nations
thus guarding the finances of its offshore banking clients from the tax
authorities of other countries moreover offshore corporations in the
Caymans are not required to submit financial reports to any Caymans
government authority an incorporation in the Caymans is a very simple streamlined
process with all these benefits it’s no wonder companies are flocking to
these remote destinations to hide their earnings method number three netting
revenues against losses if you’ve ever looked at the stats in favor of starting
a business then you will know just how bleak they can be the numbers show that
20% of small businesses fail in their first year
30% of small businesses fail in their second year and 50% of small businesses
fail after five years in business finally 70% of small business owners
fail in their tenth year in business with the chance of success in business
being rather low there are still numerous companies that succeed and make
a fortune for which they need to protect and one
of the ways they do this is through the use of loss carryforwards you see most
businesses require a few years in operation before they start turning a
profit and in the years where business is not exactly booming losses are bound
to be incurred these losses while unfortunate at the time are excellent
tax avoidance tools for future periods you see like expenses loss carryforwards
can be netted against your earnings to reduce your overall taxes payable
meaning that less of your income is subject to tax method number for issuing
stock options another way businesses reduce their taxes is by issuing stock
options to its stake holders this method is particularly convenient for
businesses for two reasons number one it is booked is an expense which will
reduce profits and ultimately the amount of money that is subject to tax
and number two it does not result in a cash outflow for the business
you see when stocks are issued they are booked as an expense for accounting
purposes but no cash changes hands this means that the company can reduce its
profits through the expense and maintain a strong cash position
moreover companies that use this strategy gain the benefits realized by
incentivizing their shareholders to further increase the stock price if you
own stock in the company you worked for wouldn’t you put an extra effort in
order to make the company’s stock value rise so that you could cash out your
options for more money with these four corporate tax strategies in mind jack is
starting to feel more confident that he can reduce or eliminate his corporate
tax bill but he knows that he needs to withdraw some income from his business
in order to live and once that cash to be minimally taxed so he decides to
switch gears and look into ways he can reduce his personal tax owing method
number five leveraging geographical tax laws for the past 20 years jack has
grown his business in the heart of Silicon Valley however his patience with
living in the state with the highest income tax rate in the United States has
finally reached a tipping point with the state income tax rate of 13.3% for the
highest income earners Jack is seeing a large chunk of his income being handed
over to his state government with even more being passed along at the federal
level while federal taxes can’t be avoided
Jack wonders what he can do to avoid some of the other taxes he is being
subject to that are eroding his personal wealth
Jack began researching other states with lower income tax rates and was surprised
to see that 7 states were income tax free such as Texas Nevada and Florida
meaning that he could save the 13.3% tax he was currently paying and still enjoy
the warmth of the Sun all year long as Jack began looking into housing options
in each of these three states he wondered if there were other ways he
could further reduce his personal tax bill method number 6 investing in real
estate part of the reason the rich continue to get richer is that they make
their money work for them and one of the ways they do this is through real estate
you see not only does owning real estate increase your wealth by generating
income but it also allows for the reduction in taxes payable when you buy
a property you are requiring a depreciable asset and because the asset
reduces in value over time from an accounting perspective you are able to
deduct depreciation and reduce the amount of income that is subject to tax
common deductible expenses include repairs to the property and mortgage
interest and the more money you spend on expenses the more you can reduce your
tax selling however once a property is fully depreciated what do you do you
sell that property and buy a new one while selling property usually triggers
tax there is such a thing as a 1031 exchange which allows you to defer the
tax you paid on selling the property if you buy
a new property within 60 days of sale in essence you can continue to depreciate
your properties and then sell them in perpetuity and never pay the tax while
still being able to use the assets to generate rental income method number
seven deferring income while Jack has looked into moving states and using real
estate to reduce his taxable income he still feels as though some of his income
will need to be sheltered for tax and another way he can do this is by
deferring his income the most common tax deferral vehicle is an individual
retirement account or an IRA which allows you to move your income into a
fund and subject your earnings to tax at a later date if you’re an employee you
probably use this type of account to hold your savings and allow them to grow
over time however they also double as a solid tax
avoidance strategy you see income earned from employment is subject to tax unless
that is you contribute the funds to your IRA account in the year you contribute
money into your IRA you will receive a deduction from your taxable income or
the amount you contributed this strategy is particularly effective for
high-income earners because it reduces their tax bill during their highest
earning years for instance if you earn five hundred thousand dollars a year and
are in the highest tax bracket your income is probably being subjected to
tax of up to 40% but what if you could avoid the 40% tax and instead have part
of your income only be taxed to 20% well you can do just that using an IRA
you see when you contribute to your IRA you do not pay any tax in the year you
contribute and instead pay tax when you withdraw all the funds which is
typically during retirement however during retirement
you’ll probably be earning much less than $500,000 meaning that the money you
withdraw will be taxed at a lower rate and the difference in tax rates is how
much you would have saved by using this income deferral technique with all these
tax avoidance techniques in your financial toolbox
you only have one question left to answer which type of tax payer will you
be from here on out a Paul or a jack thanks for watching