Wealthy Women Daily Invest in Your Dream Life
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What’s your biggest expense? What are your sources of income? How do you allocate the money you make?
For most Americans, the biggest expense you have to deal with are taxes. If your main source of income is earned through wages, you’re paying a high tax bill.
So how can you reduce your tax bill and keep more money in your pockets.
You can diversify your income, be strategic about where your money goes, and hire a trusted CPA who specializes in tax planning to ensure that you are maximizing your deductions and minimizing your “taxable” income. That’s exactly what the world’s wealthiest class of women do. They pay less than 25% of their money in taxes, leaving them with more money to grow their financial power.
Here’s what the wealthy do, and a few reasons why you should try it too:
They Prove that They Should Pay Less Taxes
The court of law says that “it didn’t happen if you can’t prove it”.
Wealthy people keep great records that show the inflows and outflows of cash. They use systems like QuickBooks to organize their finances. So when tax time arrives, they call up their accountant to review their QuickBooks transactions. All the information is available at the tap of a button, allowing them to quickly scan deductible expenses instead of playing the guessing game.
The guessing game is risky. If you guess to low, you’re paying higher in taxes and keeping less money. If you guess too high and it appears unreasonable, you’ll probably be subject to an audit.
Do you need help tracking your income and expenses? Let a money professional do it. You can hire a certified QuickBooks advisor to help you save time and money.
They Diversify their Income
All income is not taxed equally. And that’s a great thing for individuals who understand the different types of income and how to capitalize from each one.
You have earned, passive, and portfolio income. Different types of income are subject to different tax requirements and percentages.
Wages are a source of earned income. This is the money you receive from your employer or a business you own. You have to pay an income tax on all the money you earn from a job.
If you are single and your taxable income is over $500,001, you are in the 37% tax bracket. That’s an expensive tax bill if that’s your sole source of income.
So you diversify your income through real estate investing, dividend growth investing, and other passive and portfolio income strategies. Income from other activities is typically taxed lower than your ordinary income (if you know the rules to the game). For example, gains from long-term stock are taxed at a lower rate than ordinary income.
They Own Businesses
Entrepreneurship is a wealth building vehicle that many wealthy women take advantage of. And there are a ton of benefits for setting up different types of legal entities.
Trump’s Tax Reform Law drastically changed the tax rules that many have followed for decades. And for the small percentage of wealthy americans, these changes work in your favor if you own a business.
If you own a profitable corporation, you’ll see a decline in your tax bill, going from a former top tax rate of 37% to a flat rate of 21%.
If you own a pass-through entity (LLC, S Corp, Partnership), you can receive a deduction of up to 20% on “qualified business income’.
Talk to a tax professional to determine how the new laws will impact your business. If you don’t have a business yet, talk to a professional to understand how a business will benefit your personal finances.
