Four ways to save on your personal income taxes, part 1

by | Jan 10, 2022 | Blog

Some people are completely lost and cannot understand why a multi-billionaire like President Donald Trump doesn’t pay as much income taxes as they think he should.  Here are the top four reasons that he is not paying as much  income tax and there are actually ways that you can do it as well.

How does President Trump and so many others, because he’s not the only one who’s not paying any income tax or potentially very, very low income tax and he’s not doing anything illegal which is surprising to most because everybody feels like if you’re evading taxes that you are doing something illegal.  The number one thing that most people are unaware of is that President Trump owns multiple types of businesses. The type of business that you own determines different things, for instance, if you have a business that is a restaurant and that restaurant has employees; servers, hosts, cooks, all that kind of stuff you’re going to be paying employment taxes. You don’t get to get around those you’re paying employment taxes. We know for a fact President Trump has employees of various natures because he has multiple businesses, he doesn’t just have the real estate business, he also has golf courses, resorts and restaurants, and a multitude of other things. All of which have employees that he is most definitely paying employment taxes for, those would be your payroll taxes like federal FICA, and social security taxes. 

So President Trump is paying payroll taxes, but those are different from income taxes.  The other part that must be considered is as a business owner, you get write-offs and deductions based on the IRS tax code. For instance, if you owned a restaurant if you had a hundred thousand dollars in gross revenue, but then all of your employees wages were sixty thousand dollars, now your taxable revenue would be reduced down to forty thousand.  Then the business would have other write-offs and they would be subtracted from that as well. The business could even have a carryover loss from a previous year.

Oftentimes when you’re starting a business, it will have a loss in those first few years and the loss is much greater than the revenue coming in so you’re allowed to carry it over for a certain amount of time and a certain dollar amount. So if you have a loss that you carry over that also then reduces it so that 100,000 in revenue could potentially be untaxed because of all the other offsets.

The number two way that President Trump is not paying or potentially paying less than everybody feels he should income tax is because he owns real estate. Real estate also has multiple write-offs that you’re allowed to claim on your taxes. Most people know about depreciation so you can depreciate your buildings for 27 and a half years. So any improvements and expenses for the property can be written off. So if you own multifamily properties or commercial like hotels, that depreciation can be substantial. Yes, it is highly possible because of real estate to once again not have to pay any income tax or very little.  

Keep reading next week to hear the other 2 ways to save on your income taxes.

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