I Paid Zero Taxes This Year Because of this Book

Tax-Free Wealth: How to Build Massive Wealth by Permanently Lowering Your Taxes, by Tom Wheelwright

I am proud to report that I paid $0.00 in taxes this year. Legally, of course.  This was possible because I understand how taxes work.  You need to understand how taxes work as well.  Tax-Free Wealth is the book that you need to read about how to reduce taxes and maximize your money.

Just to be clear, I am not saying that I had W-2 income withholding through a job and that I did not have to write an additional check to the IRS when I filed my taxes.  No, what I am saying is that I did not pay one cent in U.S. federal income tax. (Maybe this recalls for you the scene in Parks & Recreation where Ron Swanson orders “all the bacon and eggs”. Writing that last sentence did for me).

So how was this possible? I credit this book for this massive savings and the ability to pay less taxes.  Wise investors and business owners take the time required to understand how taxes are calculated.

How to Pay No Taxes

Do What the Government Asks to Avoid Paying Taxes

Tax-Free Wealth was a mind shift for me in thinking about how to best leverage the tax code to my advantage as an entrepreneur and investor. It taught me that if I simply do what the government wants me to do with my money, then they are much less eager to tax me. At first read, I know that sounds like we somehow have to do the government´s bidding to get our tax benefits. But, what exactly do I mean by this?  It means understanding how taxes are calculated and the things that the government wants you to do to reduce your taxes.

The tax code is set up, call it rightly or wrongly, to punish the regular W-2 income worker who spends their income on consumable goods and other, for lack of a better word, “non-assets”. On the other hand, in preparing the tax rules, Congress used its taxing authority to incentivize us to take actions that Congress, whether it will admit it or not, knew private citizens were capable of doing better than the government could itself. In other words, if we spend our capital in the manner that Congress wants us to then we will be rewarded for that in the form of lower taxes and better tax deductions. The good news is that spending our capital as Congress hopes that we do is aligned with our goals as investors and entrepreneurs.

What are the two big areas of investment where we are most incentivized from a tax perspective as entrepreneurs and investors? Investing in and creating businesses (job creation) and providing housing (real estate investment). This year I invested enough capital into my real estate rental portfolio and to start and build new and existing businesses that those “expenses” (in IRS terms), which we are all smart enough to recognize as actually being an investment and not an expense, completely offset my income when taken together with other deductions, credits and benefits that come from these two tax-friendly activities.

Without question, Tax-Free Wealth guided my actions and decisions with respect to how to use capital in my businesses and certainly will in years to come to reduce my taxes. As entrepreneurs and investors, we focus so much on growth and where our next dollar will come from. Don´t forget that, in many cases, that next dollar can more easily come from just a little bit of appropriate tax strategy, knowledge and organization.

This book will get you there!

How Much Taxes Will I Pay?

Get Good Advisors

There is simply just too much money at stake to be cheap here when it comes to tax-planning. Even if you are just starting out, getting the right tax strategy in place now can save you a ton of money and headaches down the road. Frankly, it is just harder to work backwards if you start with a bad tax strategy.

Definitely don’t do your own taxes. Hire experienced tax professionals. If you can afford not to, don’t hire anyone who doesn’t have a long list of entrepreneurs and investors as other tax clients. Good tax advisors can be expensive, but the cost is usually nothing compared to the savings you can realize from working with someone who is knowledgeable and proficient.

Organization is also critical.  If you want to have the best result financially from a tax perspective, you need to create and keep great records each taxable year.  You could be losing a lot of money if you are losing track of deductible meal and travel expenses, as just one potentially materially example for how taxes are calculated!

Be Proactive

Tax strategy. Asset protection. These are things that you need to get a jump on if you are building businesses, wealth and an investment portfolio that you want you, your family and others to benefit from into the future.  I get it. These tax topics don’t usually arouse a great amount of energy and action in people. That is a mistake. If you need a good push towards taking the advanced tax-planning steps that you know you should be doing now (even if you are just starting), the visualization and hard dollar numbers presented in this book showing the downside of failing to prepare well from a tax perspective will motivate you. If you are planning to make a lot of money in the future, have a big exit from your business or build real wealth, you will be kicking yourself down the line if you are negligent when it comes to your tax-planning and understanding how your taxes are calculated.

The Value Proposition of Tax-Free Wealth

If you could pull one tip from Tax-Free Wealth for the under $20 price tag it is likely to cost you, do you think it would be a good investment? The answer is yes.  Tax-Free Wealth saved me a six-figure income tax bill this year alone!

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I am proud to report that I paid $0.00 in taxes this year. Want the same? This book is your guide to how taxes work and how to obtain the same result.