Do-gooder investments they can write off on their taxes. The article talks about a tax law called Opportunity Zones. Essentially, these are low-income areas of the country where the rich can invest their money to spur economic development. Learn more in my book, Tax-Free Wealth; get your copy now. Robert Kiyosaki: America's 'Rich Dad' Sees a Real - BiggerPockets I used to agree. That is the fundamental difference. In truth, there is very little that those folks can do to reduced their tax burden, aside from having kids, deducting some debt like mortgage interest and college loan interest, and doing some low level financial vehicles like a 401(k) or Health Savings Account (which are really tax deferments, not savings). Is there anything worse than the dreaded feeling of opening your monthly credit card statements? Poor Dad believed in studying hard and getting good grades, then finding a well-paying job. The IRS will reward you if you take entrepreneurial risks. A flowery press release, no or deferred taxes, and the IRS gets to suck a penny? Here's a real-life situation in which I played by the rules of the rich and minimized my taxes through rental property: 2004: My wife, Kim, and I put $100,000 down to purchase 10 condominiums in Scottsdale, Ariz. With over 32 million copies sold in 59 languages . As a persons knowledge about taxes increases, their risk of overpaying their tax decreases as does the risk of incurring penalties and interest. Join a FREE game of CASHFLOW Classic now . They are high-paid employees who earn the highest-taxed type of income: earned income. Historic building tax credit Theres a federal tax credit for investors who rehabilitate qualifying historic buildings they can claim 20 percent of eligible improvement expenses against their federal tax liability. This profit can then be distributed to shareholders as a dividend. Kim and I have several such scenarios active at any one time. Required fields are marked *. First, stop looking for a high-paying job and start thinking how you can create them instead. And the good news is that you can start thinking like the ultra-rich when it comes to taxes and money, and your wealth will grow. Most people are not trained to see it.". https://t.co/49urDACbIu, Making a billion dollars isn't cool. In fact, it would absolutely shock me if Trump paid any taxes. "There is a difference between being poor and being broke. You do not have to start big. So, consider this when using this method on how to decrease your taxable income. They showed he did not pay any federal income tax. The advice doesnt apply to most peoples situations. If you can become a professional investor, a true entrepreneur, you can reduce your tax rates to zero. Best known as the author of Rich Dad Poor Dadthe #1 personal finance book of all timeRobert Kiyosaki has challenged and changed the way tens of millions of. Second, invest your earned income into assets that produce passive income via cash flow every month. In Rich Dad, Poor Dad, Robert Kiyosaki is clearly strongly against taxation, and says that people should learn how to decrease taxable income, saying things like: Most people work from January to May just for the government. Whats their secret? The tax rates are approximately the same depending on how you earn your money. Its unjust, they say, that the rich can avoid paying taxes while the middle class and the poor are stuck with the bill. Discover how to overcome mental barriers and tap into your full financial potential with these 7 mindset tips. Want to learn more about the power of corporations? How long would it take you to save $20 million by parking your money somewhere, as most financial advisors recommend. Your email address will not be published. We legally paid no taxes on our million dollars of capital gains. Are you looking in the wrong places to find wealth? Who creates jobs? The problem, however, is that most consultants pay the most in taxes because they dont make passive income. Conversely, when you look at the lower tier of income earners, people making up to $48,000 a year actually pay net negative income tax. Even if theyre not required certifications, investment in business education is a must if you want to stay on top of your field. If you do it legally, then the government is more than willing to be your partner. Become a passive investor: Im not talking about the typical investor who invests in the stock market through a mutual fund or an exchange traded fund (ETF). Yes, they pay more in taxes than employees. The government wants you to create employment so you partner with them to create employment. As mentioned above, you should consult with legal counsel or tax experts before taking any steps on how to decrease taxable income. The $100,000 eventually allowed us to borrow over $20 million from banks, tax-free. As Mike Dillard put it this episode could literally save you tens-of-thousands of dollars or more in taxes, so listen up! 4.6 76 ratings #1 Best Seller in Taxation See all formats and editions Audiobook $0.00 Free with your Audible trial Tax-Free Wealth is about tax-planning concepts and how to use tax laws to your benefit. Playing games is the best way to increase financial IQ. Thankfully, thats not difficult to do. When you invest with taxes in mind, you keep more money and make better investment decisions. And again, people dont like that. One of the main differences between the two entities is how corporations pay taxes. The $100,000 eventually allowed us to borrow over $20 million from banks, tax-free. The company may pay $400 per month for childcare out of pre-tax dollars. Print length. Bryan Yen, Taxes rarely excite anyone. HOW TO CONVERT A LIABILITY INTO AN ASSET - ROBERT KIYOSAKI, Rich Dad Answer (1 of 2): The claim holds good across the world. She wrote her first short story at the age of six, about a lost dog who meets animal friends on his journey home. Lesson 1: The rich don't . When presidents promise to raise taxes on the rich, they typically mean the middle class. ", He also said, "If you want to be rich, you need to play by the rules of the rich.". When you take into account that the average earner in the 0.01% makes $26.1 million, you can start to see that those who many would consider richthe top 1% of earnersare actually paying a lot more in income tax than those who are ultra-rich, the top 0.01%. First, they want to create more jobs. For instance, instead of paying capital gains tax on the sale of our condo units, real estate laws allowed us to defer paying these taxes and invest them into another property instead. Frustrated and frightened by the financial advice Your only purpose in life is to go to school so you can get a job and then pay into the government. It also needed repairs. If you're sick of seeing so much of your money swallowed up by taxes each year, buy this Rich Dad Education book and learn what you can do to change that. Once the rehab was complete, we moved good tenants in and raised the rents. A lot of people think there are two sets of rules, the rules for those who are successful and the rules for everyone else. Start playing more games today. In Rich Dad, Poor Dad, Robert Kiyosaki is clearly strongly against taxation, and says that people should learn how to decrease taxable income, saying things like: Whatever your philosophical bent on taxation, the practical point is that the rich find ways to minimize their tax burden, sometimes paying a lower % of their income than lower tax brackets. We made approximately $100,000 in capital gains per unit. Want to grow your and your familys financial IQ? In 2017, interest in Tom's approach to tax reduction and wealth building became so great that Tom needed more than 1 CPA firm to properly serve each client. We'll assume you're ok with this, but you can opt-out if you wish. Since 2011, Wheelwright has been a keynote speaker at Rich Dad conferences worldwide on six continents (Africa, Asia, Australia, Europe, North America, and South America) with Robert Kiyosaki (Author, "Rich Dad Poor Dad"). Small business ( like one man controlled shops or propriet. Your road to faster financial freedom is through those two quadrants. Many of these folks have gone on to simply invest full time in real estate. It was good news for employees, or at least most of them. Narrated by: Tim Wheeler. Join a FREE game of CASHFLOW Classic now , Use the Power of Play to Escape the Rat Race, Unlock the Door to Wealth: 7 Mindset Shifts to Achieve Financial Success, How to Get Out of Credit Card Debt in 8 Steps. After the 40% tax, this is equivalent to $36. A word of warning: these are sophisticated techniques that require strong financial knowledge. The Rich Dad Poor Dad book is seen as the bible of personal finance. Corporations and trusts can protect assets from creditors. The more sophisticated you get in reducing your tax burden, the more help youll need from experts. Ive written about this before, most notably when I published Why I Hope Donald Trump Paid $0 in Taxes.. About 30 pages are devoted to raising taxes. She did the math and realized that equaled $78 a year, which would cover the cost of her Costco membership. You can go to school, get a job and earn it as an employee. Use the Power of Play to Escape the Rat Race, Unlock the Door to Wealth: 7 Mindset Shifts to Achieve Financial Success, How to Get Out of Credit Card Debt in 8 Steps. Theyre not hard to do, but they do require a financial IQ. Dont rely on a job or the government to put money in your pocket. Rather, it is built over time, but the steps begin today. Of course, the government is in on this. Tom is a regular commentator in the field of taxes and contributes regularly in major professional journals and online resources. Start playing more games today. So, if an employee is paid $30,000 per year, by the time the government gets through with it, it may be down to $20,000. Its not fair, they cry, that the rich get to make the rules when it comes to taxes. Next week, I'll talk about death (Halloween is just around the corner after all), but this week I want to talk about taxes. With the right team around you and with the right instruction, such as the lessons in Tax Free Wealth, you do not have to be afraid of this. Donald Trump has paid nothing in federal taxes. In short, a business that produces passive incomethe lowest taxed income. Rich Dad Poor Dad by Robert T. Kiyosaki - Audiobook - Audible.com And taken incorrectly, it could get you into trouble. Tom is an unapologetic proponent of the radical idea that you are fully capable of controlling your own financial future. Taxes are a huge expense so minimizing them is key to a better ROI. Discover how to overcome mental barriers and tap into your full financial potential with these 7 mindset tips. It does not matter if you are in Santiago, Chile, Sydney, Australia, Johannesburg, South Africa or San Francisco, California. Want to grow your and your familys financial IQ? Meanwhile employees and small business owners may be scared to death of one audit because they are cheating or because they are not used to it. On the flip side, the poor and middle-class toil away for their money, pay more in taxes the more they earn, and then park their earnings in savings and/or retirement accounts. So Tom sold his CPA firm and created an education company: WealthAbility with the mission to educate more entrepreneurs and investors than ever before. Do they know about loopholes that are in the law that allow them to get away with not paying tax? Kim and I have several such scenarios active at any one time. How Debt and Taxes Can Make Smart Entrepreneurs Rich | Entrepreneur But, it never occurred to her that they also work for the working middle class who are looking to move upwards financially. Evading taxes on that windfall under the cover of opportunity zones! The book is often quoted on social media. The remaining 5,770 pages are devoted entirely to reducing your taxes. Robert Kiyosaki's easy tips and straight talk will Explode the myth that you need to earn a high income to become rich You may think that you have no choice about how much taxes you pay. Start Your Business the Right Way Meaning, the the rules of money are skewed in favor of the rich, and against the working and middle class. "People's lives are forever controlled by two emotions: fear and greed.". The only years of tax returns anybody has ever seen were from a couple of years when he had to turn them over to state authorities to get a casino license. Why does this paradox exist? We put the $1 million into a 1031 tax-deferred exchange. For instance, the government wants cheap housing. Oil and natural gas are essential for transportation, food, heating, plastics, and fertilizers. Get ahead with his pull-no-punches style of challenging the advice we've all been given on money, investing, and the economy. Why You Should Invest in Real Estate for Tax Advantages ", He also said, "If you want to be rich, you need to play by the rules of the rich.". The cash that does come from this property goes into our pockets at a lower tax rate because there's no Social Security or self-employment tax to pay, and the tax rate is further reduced by the depreciation of the property. You may think that you have no choice about how much tax you pay. You do not have to have a balance sheet, a statement of cash flows and all these other financial statements, so these people love an audit. Are you looking in the wrong places to find wealth? Including The Real Book of Real Estate(December 2016), Tom was the author of Chapters 1 and 21. Get CASHFLOW click here. I suggest reading Rich Dad Advisor, Garrett Sutton's book, Start Your Own Corporation: Why The Rich Own Their Own Companies and Everyone Else Works For Them. Looking again at the CASHFLOW Quadrant, we can see who pays the most in taxes. What else does the government want? But the government wants big business and investors to succeed. If all your income is generated as an employee from a company that you don't own or control, there's little income or asset protection available to you. Governments even get more specific about the types of investing and jobs they want the market to create by giving specific tax breaks for oil and gas investing, farming and other agriculture, green energy, and low-income housing. Treat none of this as actual tax advice; seek a tax attorney for real advice, and executing some of this too liberally is illegal.). Did You Leave Money on the Table This Tax Season? But as my father (and probably your father) said, Life isnt fair., Rather than focus on whats fair and spend my time complaining, I prefer to know the rules the rich make and play by them myself. Corporations. Their assets are held in trusts and corporations to protect them.