you know Albert Einstein he said at best the hardest thing in the world to understand is the income tax the rich have very expensive accounting experts that help them to minimize just how much money they pay in taxes in the last decade we've learned quite a lot about the field and this expertise has allowed our companies and personal wealth to grow at an accelerated rate write all of this down because you don't know when this information will come in handy but keep in mind this is not Financial advice this is is just what we've seen the rich use to grow their wealth and we believe it's valuable for you to know about it here are 15 ways rich people pay little to no [Music] taxes so starting off at number one they invest all of it the rich don't sit on cash unless they need it for something specific here's the Golden Rule when it comes to paying taxes reinvested profit is not tax next if your company was about to make $5 million in profit and before the end of the fiscal year you choose to invest that5 million back into the business in order to grow it even more well you don't have to pay taxes on those 5 million that's how companies grow quickly as the owner of the business your net worth goes through the roof with little to no tax being paid number two everything you use is owned by a business the second Golden Rule of of tax optimization is deduct everything here's the thing okay if a business needs anything to function the money you spend isn't taxable you want to buy yourself a new car well the company needs the car as well so allow the company to buy it on the company's dime and you get to use it since you need it to run the business now here are some of the things that rich people deduct any type of Technology Hardware software Etc laptops phones gadgets they're all needed for the business travel hotels and flights are needed for business trips home office and utilities like the internet health insurance premiums and even going out to eat can be a deductible expense the more things you can deduct the less money there is to be taxed number three move somewhere with little to no tax you know people often underestimate just how big of an impact it'll have if you move to somewhere where you're allowed to keep all of your money this used to be the way it was back in the day you would move to Dubai Monaco the Cayman Islands or the Bahamas as your main residents these countries have no income tax they don't require you to pay any tax on the money you make but there is a catch it's usually really expensive to move there which is why rich people get an unfair advantage in life the cost of living in Monaco is incredibly high but when you take everything into account well you still save more money living there if your taxes are high enough to justify that move number four send it overseas this is how Facebook Google and apple do it they set up companies in Ireland because of its tax-friendly environment these companies own the intellectual property the US company needs to pay a licensing fee to the Ireland company every year to keep developing and selling its products in the US this created a legit deductible expense for the US company through this scheme they're taking money out of the US economy and moving it to Ireland where they end up paying only 1% or even less with even more optimization if you live in a low income tax country you can always set up a local company there and invoice your us subsidiary for rendered Services minimizing the tax burden in the US companies like these Tech Giants would rather pay a fine than pay their taxes in full the more you think about it the more you realize a fine is a tax for doing something wrong a tax is a fine for doing something right number five charitable donations so the fifth rule of taxes money donated to charity is not taxable this is why every Rich individual owns a foundation of sorts in their defense the state has always proven to be a poor manager of money so instead of giving the state your money to do with as it pleases well you're better off using a charitable Foundation to make sure your money actually has a positive impact on your community but where things get interesting is that even these non-t taxable foundations have deductible expenses they need things to function you could even donate land vehicles or other assets to a charity you own and it still counts as a charitable contribution also as the head of the charity group you can still use the same car you donated on paper number six instead of a salary they take Equity as Queen Bee put it pay me in equity you do this for two reasons first of all Equity might increase in value over time and secondly Equity isn't taxable unless you sell it this is how Elon Musk got so rich so quickly based on the company performance Elon gets a new minted stock instead and that's the thing so many people don't realize how people become so wealthy it's common to think these folks are sitting on piles of cash but they're smarter than that and if you want to be as smart as they are we've got just the tool for you we developed the alux app specifically with the objective of getting you to your goals faster than it would take you all on your own and you can try it right now for free there's zero cost for you upfront and you get to use the app for a full week to sample its value before being asked to subscribe and trust me okay there's tons of value in there when you sign up you fill in a survey that will pinpoint where you are in your journey and our algorithm will build a unique learning path customized just for you one app course you're really going to want to have is our money 2011 accelerated wealth building collection that builds on the basic fundamentals to show you step by step how to really reach the level of wealth you're after the alux app is going to help you win the day in 15 minutes minutes a day and we can't wait to see the improvements you make in just the first week alone with the aoap playing Mentor thousands of people have already seen their success snowball pickup speed and we want that for you too so to sweeten the deal scan the QR code on screen to get 50% off the yearly subscription make sure the app is downloaded first then scan the code to get the special offer we'll see you on the inside number seven buying art here's something only the rich know the art trade is the last major unregulated Market when you buy a piece of art it counts as an expense and if you've been following Along by now you should know that a good portion of expenses can be deductible but as the rich know there are layers to this let's say you earn $1 million this year and you decide to blow it all on a 1 million painting So since the expense matches the income there's zero money left to be taxed 3 years go by and now that same painting you own is worth $6 million or at least that's what a professional appraiser told you so instead of selling it for profit you decide to donate it to a museum or better yet your own Art Foundation now this means you just scored a $6 million tax deductible assuming you're still earning $1 million a year you just saved an additional $5 million in non- taxable income and it's all legal you could even go for another round if you want to let's say you decide to sell the painting at $6 million valuation earning you $5 million in profit on that deal which normally would be taxed right well the government once again comes to the aid of the super wealthy if you take all the money you made from that sale all 6 million of it and you buy more art with it you don't have to pay any taxes on the profit you made from that sale that's why rich people buy art and this is the kind of information that people subscribe to our channel for you're not getting this anywhere else number eight multiple nationalities with no fixed residence now this is probably the shadiest and most confusing one on this list but people have done this successfully everywhere around the world so when it comes to paying taxes you have to pay taxes in your country of residence your home country but what happens when you no longer have a home country because there are plenty of super wealthy individuals that choose not to have a home country despite owning properties all over the world when institutions ask for a proof of address they provide one from a property they own in Thailand or Bhutan and that's a different language and overlooked by a government that has no intention of providing any additional information then there are folks that buy a massive yacht and use that as their primary home one day you're parked off the coast of Monaco then next you're in international waters now although we recommend having more than one nationality so you can reap the benefits of multiple passports you know we don't really think that going fully Off the Grid is a great long-term solution number nine gift money away did you know you can gift things to people and that gift is non- taxable crazy right there is a $115,000 cap on that gift though so if the gift is worth less than 15K you don't have to tell the IRS about it because it counts as a non- taxable event now you might be thinking okay cool but this is a video about really rich people and how they optimize to get the most out of it 15K barely gets you into the Rolex game gift wise well $115,000 might not sound like a lot but there's more room to maneuver here as of 2021 the lifetime gift exemption is capped at $1. 7 million in the US as long as each gift is less than 15K $1. 7 million in tax-free wealth well that translates to a hell of a lot of Rolex watches number 10 hold it in privacy coins now crypto is changing the game in terms of wealth transfers and wealth security the fact you can put a billion dollars on a stick put it in your pocket and fly to Singapore with it is mindblowing with the likes of Bitcoin and ethereum which are heavily regulated measures are in place to provide transparency link wallets to individuals and make sure everyone is paying their fair share by the way profits from the sale of crypto are only taxed at 10% in most countries still giving a better return than some other assets if you take into account the industry price appreciation so if all of this sounds really exciting to you go to alux.
com bitcoin and look over our Bitcoin Essentials course it's meant to help you get started with crypto as quickly as possible and if you use the promo code aluer you can get 25% off at checkout Bitcoin is completely legal and it is here to stay but there's more to it the rise of blockchain has given way to a new breed of technological currencies called privacy coins so these can be exchanged stored and transferred completely anonymously privacy coins are not illegal but their legality does remain subject to each jurisdiction the belief here is that once you make your your money legally you should be allowed to transact it without other parties overlooking your transactions number 11 you've got no money but you've got assets you can borrow against so here's why most rich people are super wealthy but cash poor in order to take cash out of your businesses you need to pay taxes on that money so rich people choose to never take that money out they just leave it as stocks or assets but there are situations when you need some kind of of cash that's where the relationship with your bank comes into play rich people walk into Banks and say look at how much stuff I own the cars the assets the stocks I'm good for the money if it comes to it so give me a loan and Banks look at that portfolio and they give wealthy individuals access to Quick Cash anytime they want now since this is technically a loan they're taking out this isn't their money so they're not required to pay any tax they just have to give it back if all of it happens through a company and not from an individual perspective well this mutually beneficial relationship can go on for a lifetimes number 12 filing for bankruptcy now filing for bankruptcy is expensive tiresome and complicated unless you're super rich and you know how to get over it so here's how the process works let's say you're a pretty decent lawyer making $250,000 a year you own a $1 million home and you you manag to save an additional $1 million so you're looking to go into business and you decide to buy a $10 million office building because it'll make you a lot of money you go to a bank you put your 1 million down you get a $9 million loan and you buy the office building one year later a pandemic hits and all of your tenants leave you still owe that bank $9 million so to make matters worse the building you bought is now worth only $5 million because nobody wants to buy an office building right now but since the office building is owned through a company our lawyer can now file for bankruptcy although they will take the office building away from him and they'll have a really hard time ever working with that bank ever again bankruptcy laws prevent the bank from taking away the house or siphoning off his wages this is the difference between being poor and being broke rich people can be broke meaning that on paper their net worth might be zero or even in the negatives but they'll never be poor also if you don't need the bank pay it all out in cash the financial loss would still count as a tax deductible meaning that for the many years to come you won't need to pay taxes on your income until you catch up to the amount of money you lost number 13 claim your yacht as your second home so here's an interesting observation when it comes to taxes governments love homeowners and despise the super wealthy who like to splurge they really want to tax these showoffs # tax the is still trending all around the internet right now so what do rich people do to combat this well they claim their Yachts as secondary homes to get better taxation rates at the end of the day it is true they're using it as a holiday home when they're traveling to mikos during the summer as long as the boat has sleeping cooking and toilet facilities well the IRS treats that boat as a second home and you know motor homes can be used the very same way but how many super rich people do you know buying motor homes these days number 14 using a trust to avoid paying estate tax so among the rich there's a funny saying that goes like this a person doesn't know how much they have to be thankful for until they have to pay taxes on it so unless you're rich you might not be aware of this if you're rich and you die the state taxes up to 45% of the wealth you want to pass down to your children this is called an estate tax by the way here's some important information the US qualifies you as Rich if you're worth more than $1. 7 million for everyone worth less than that there isn't an estate tax or it's considerably lower 11.
