How to legally escape paying taxes: You literally get paid ..

How to legally escape paying taxes:

You literally get paid by understanding how taxes work using it to save money on taxes. The secret to paying less in taxes is to make your income look as low as possible without reducing your income.

Disclaimer: consult a licensed CPA for your own specific situation. Your results may vary depend on your state, income, tax bracket

Number 1:
Traditional 401(K)

If your annual taxable income is $100k and you contribute $10K to a traditional 401(K) that reduces you taxable income down to $90k. Then you’re not taxed on that extra $10k worth of income. The maximum amount workers can contribute to a 401(k) is $19k per year. The IRS will tax you as though you just made $19k less.

If you are self-employed you can open what’s called a Solo 401(k). This allows you to contribute up to $56k per year. This will help you get taxed as if you made $56k less.

Number 2:
Traditional IRA

This one is similar to traditional 401(k) except anyone can open up one of these accounts. With this you can contribute up to $6K per year and reduce that from their taxable income.

Number 3:
HSA Account (Health Savings Account)

This will allow you to contribute up to $3,550 per year completely tax free into this account. This account is made to pay for any out of pocket medical expenses. If you don’t use them in one year it will roll over to the next year. Money you spend on qualified health expenses is not taxed. The benefits are different depending on the states that have specific benefits.


Number 4:
457b Plan

This one is for people who are employed by a state or local government. So not everyone is able to do this one. With 457b Plan, you can contribute up to $19K per year and reduce your taxable income by that amount. The benefit of having a 457b Plan is that you don’t have to wait until you’re 59 can withdraw that money. You can withdraw at any age, upon retirement.

Number 5:
Standard deduction

This is the base amount that anyone is able to deduct automatically from their taxable income. If you’re single you can take the $12,000 standard deduction. It’s that easy. If you’re married filing jointly will increase the amount to $24,000 this is really straight forward and most people are able to do it.

Total of tax deductions:

$12,000 Standard deduction
$19,000 Traditional 401(k)/457b Plan
$6,000 Traditional IRA
$3,500 Contribute to HSA

This alone can save you a total of $40,500 in taxes a year!

By utilizing this information you can have more control over you money by just understanding this information. Hire a good CPA so you can understand your own specific situation. These are some ideas that you MIGHT be able to implement. Again, consult a LICENSED CPA for tax advice.