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How To Pay Little To No Taxes For The Rest Of Your Life

Short-term and Long-term capital gains tax rates by income
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Want to learn how to pay no taxes? Read on. I’ve been studying up on tax laws since 1999.

Ever since I was 25, I paid more than $100,000 a year in taxes. You don’t get a thank you card if you pay over $1 million dollars in taxes in case you’re wondering. Instead, you get the government hooked on your juice with fishing letters from the IRS asking for more!



I didn’t mind paying my fair share of taxes when I was in my 20s because I was excited to progress in my career. I felt lucky to just have a job that allowed me to save like crazy and help others financially through charitable donations. As I grew older, my views on income taxes changed.

Since the turn of the century, we’ve witnessed a devastating war in Iraqistan that by some estimates has taken over 1 million lives. We’ve observed Congress do nothing to pass a balanced budget since 2008 while giving themselves pay raises every single year.

During the 2009-2010 financial crisis, the government doled out massive bailouts to institutions such as AIG while allowing executives to pay themselves millions of dollars. AIG even had the audacity to contemplate suing the federal government this year for wrongful terms! What the hell.

I felt sick to my stomach supporting such atrocities by a government who also discriminates against certain citizens while displaying no fiscal discipline. Why can’t we all be treated equally? Why is there a marriage penalty tax? How come your Social Security benefits go back to the government if you die without a surviving spouse? I don’t know.



Pay Less Taxes Because The Government Is Inefficient

When it takes 18 months for the city to fix a noisy and dangerous manhole cover, perhaps paying tens of thousands of dollars in state taxes is not worth it anymore. How about $5 bucks instead?

John F. Kennedy once said, “Ask not what your country can do for you, ask what you can do for your country.” Unfortunately, those words were spoken on January 20, 1961. Most of us weren’t alive then since the median age in America is only 35. I’m afraid our society has permanently adopted a one-way take, take, take mentality.

I think I’ve paid my dues. Unless you’ve paid as much in taxes, please don’t criticize me for writing an article on how to help you legally pay less taxes. To build wealth, we must minimize our expenses. Taxes are one of the largest expenses we’ll ever incur.

The Best Way To Pay Little-To-No-Taxes



Besides earning less money, the best way to pay little to no taxes is to make your income equal your itemized deductions. Single filers get a standard deduction of $12,000 while married couples get $24,000 for 2021+. Therefore, if you want to pay no taxes, then make up to $12,000 a year as an individual or up to $24,000 a year as a couple and voila! You won’t pay any taxes.

The problem is no single person or married couple can live off only $12,000 or $24,000 in income, respectively. Hence, forget about the pitiful standard deduction. Go for the itemized deduction which includes home mortgage interest, property taxes, and charitable givings.

Obviously you need a mortgage to be able to pay mortgage interest and property taxes, so consider owning a primary residence already. The government subsidizes your ownership by allowing you to write of your mortgage interest and property taxes.

If you want to truly make money in real estate, then you’ve got to own more than your primary. One way is by buying a rental property. With a rental property, you also get to take advantage of depreciation and other expenses associated with operating the property. Therefore, you earn income more tax efficiently.



As for charity, give as much as you can. It is better to give to causes you are passionate about rather than pay more taxes to the government who ends up wasting your money.

The below are three examples with some notes on how to minimize your tax bill.

How To May No Taxes On Job Income Or Passive Income

How To Pay No Taxes Notes

* To generate passive income, you’ve first got to save a lot. You can replace my passive income examples with normal wage income if you like. The effect is the same.

* What is peculiar is that one still has to pay property taxes to the state. At least property and state income taxes are deductible and the money is not going to the federal government. You can choose to move to a different state to lower your tax liability. Changing citizenship on the other hand is much more difficult.

* Starting in 2021, there is a SALT cap limit of $10,000 per person. If you get married, you actually don’t get $20,000 but still only get a $10,000 limit. This is going to be a net negative for many higher income earners who own property in expensive coastal cities.



* A $30,000 mortgage interest deduction can be calculated as a 3% mortgage interest rate off of a $1 million dollar loan. Too bad the mortgage limit is now $750,000 for 2021+. Some may poo poo paying interest, but I say paying interest with other people’s money to build wealth is much better than paying taxes to the government.

* If you have a modified adjusted gross income (MAGI) of $200,000 as an individual, or $250,000 as a married couple, you’ll also have to pay a 3.8% surcharge tax on all capital gains and dividend income. This is called the Net Interest Income Tax. The government does not have the guts to cut spending, hence more taxes are inevitable.

* You might be wondering how does someone survive if their entire $60,000 in income goes to charity, mortgage interest, and property taxes? The answer lies in living off your savings.

The Standard Deduction

The standard deduction was increased to $12,000 per individual and $24,000 per couple in 2021. In other words, any income you make up to these levels is tax free. If you are in the 10-12% TAX BRACKET you pay zero percent tax on long term capital gains and qualified dividends up to $77K.

 2021 Federal Income Tax Brackets

How To Pay Zero Taxes on Rental Property Income

How To Pay No Taxes On Rental Income

How To Pay No Taxes Notes

* Owning a rental property is like owning a business. All expenses related to running your rental property are deductible from the rental income. Just be careful that deductions start phasing out after you make more than around $166,000 a year.

* A key part of the expense is depreciation. Depreciation is a non-cash expense to provide a fair way for the normal depreciation of your property.



* There’s no escaping property taxes again, but at least it is deductible. It’s important to convince the city your property is worth the least amount possible to pay the least amount of property taxes.

* It’s best to receive no rental income while you are in a higher tax bracket. Once you’ve retired, you’ll probably be in a lower tax bracket and should receive more rental income given your rent will be higher and mortgage interest and amortization will be lower.

Rental Property Is Less Passive

The only thing about owning rental property is that it scores low on the passive investing scale. The older and richer you get, the less you want to deal with maintenance and tenants. This is where investing in real estate crowdfunding platforms like Fundrise and CrowdStreet, my two favorites, come in.

Real estate crowdfunding allows you to invest in commercial real estate around the country with potentially higher returns without any grunt work.

For example, there is huge valuation and cap rate differences today between expensive coastal city real estate and heartland real estate. With real estate crowdfunding, an investor can arbitrage the valuation and cap rate differential for potential profits.

There’s no reason employees need to be stuck paying $4,500 a month for a crappy two-bedroom apartment in San Francisco or Manhattan when they can rent a massive house for half the price in Austin, Texas.

How To Pay No Taxes On Business Income

How To Pay No Taxes On Business Income

Notes On How To Pay No Taxes On Business Income



* Starting your own successful business is harder than just working a day job, but it’s one of the most gratifying things you can do. A lot of your normal living expenses can be considered business expenses. For example, you can have annual board meetings in Rio de Janeiro if you want. The flights, meals, and accommodations are all expensable. Nobody says your annual board meeting has to be in a place of suffering. Everybody should at least start their own website today to take advantage of the internet and the 3 billion people online.

* As an employer and employee, you get to contribute up to $19,500 to your Solo 401K + 20% of operating profits. In this case, the person contributes $18,000 + $13,000 = $31,000 that doesn’t get taxed. You can also contribute $5,000 for yourself and for your spouse in a traditional IRA. Eventually you will have to pay taxes on these pre-tax retirement accounts, but not now.

See: How To Save Over $100,000 Pre-Tax In A SEP-IRA And Solo 401k

* The business has a net profit after tax of $16,800, however you’ve got so many more tax shields at your disposable which can easily wipe out the tax liability.

* Business taxes are one of the most complex taxes to calculate. The above is just a simple example of how a cupcake owner with $100,000 in revenue might not have to pay any taxes at all.

How To Pay Less Taxes On Business Income Part II

How to pay less taxes like Gawker Media - create international subsidiaries

Notes On How To Pay Less Taxes

After Gawker Global filed for bankruptcy, Fortune Magazine wrote an amazing expose regarding how Gawker Global created a Hungarian subsidiary to transfer revenue to in order to pay only a 5% effective tax rate instead of a 34% effective US tax rate. I’ve put together a sample income statement of the parent company above that reflects a huge tax savings thanks to inter-company dealings.

Recommendations On Paying Less Taxes

Start Your Own Small Business



I encourage everyone to start their own small business. You get a lot more flexibility with deductions as you can see in the example above. The best way to start a business is create a website like mine by signing up for a hosting company like Bluehost, which costs less than $4/month. You get a free domain name for one year too.

Once you’ve got your simple website up and running, you help legitimize your business. There’s no need to incorporate as an LLC. Just be a sole proprietor, report your income on your schedule C, deduct all your expenses, and pay taxes on your operating profit.

Whenever I spend money on travel, it is largely a business expense because I’m always prospecting for potential clients. I expense a portion of my car lease payment given I drive down to the Peninsula to work at my consulting clients. Many of my meals are also expensed due to client luncheons and dinners.

Finally, I contribute over $50,000 a year pre-tax to a Solo 401k because I run my own business. You can check out my step-by-step guide on how to start your own website today. Once you’ve got your own website, you’ve helped legitimized your business.

Manage Your Finances In One Place

I recommend signing up for Personal Capital, a free financial management tool online that helps you track your net worth, analyze your investments for excessive fees, and manage your cash flow. I ran my 401k through their 401k Fee Analyzer and found out I was paying $1,700 a year in fees I had no idea I was paying!

They’ve also come out with their incredible Retirement Planning Calculator that uses your linked accounts to run a Monte Carlo simulation to figure out your financial future. You can input various income and expense variables to see the outcomes.

Personal Capital Retirement Planner
Increase your retirement success to 99% by living on less

Updated for 2021 and beyond.



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