5 Ways You Can Reduce Your Tax Bill Like a Millionaire, According to Robert Kiyosaki
Written by
Josephine Nesbit
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Jenna Klaverweiden
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If you want to reduce your tax bill, you have to think like a millionaire.Â
A recent article on Robert Kiyosaki’s website explained that the rules of money are often skewed in favor of the rich — and if you want to be rich, you need to play by their rules. One of these ways is to take advantage of tax breaks. The IRS tax code was written to reward certain behaviors, such as investing in real estate, starting a business and getting business education.
According to the article, here are five ways you can save money on taxes like a millionaire.
Start a Business
Simply starting a business and making money doesn’t necessarily mean you qualify for tax breaks — unless you form a business entity. This can be an LLC, an S corporation or a C corporation, per the article on Kiyosaki’s website.
According to the IRS, business tax credits include general credits, investment credits, and credits for energy, work opportunity, research and more. Businesses can also write off expenses like office space, equipment, travel, marketing and even a portion of home office expenses.
There’s also pass-through taxation. Shareholders in businesses, like an S corporation, report the flow-through of income and losses on their personal tax returns and are taxed at their individual income tax rates. This allows these entities to avoid double taxation on corporate income, per the IRS.
Prioritize Education
In the article, Rich Dad advisor Garrett Sutton recommended investing in business education if you want to stay on top of your field.
According to Sutton, you can deduct expenses from business-related seminars. These expenses can include registration, meals, lodging and transportation costs. Corporations can also deduct industry-related magazine subscriptions, memberships to professional organizations, and testing and licensing fees.
You can also have up to $5,250 in educational assistance each year for educational expenses, per IRS Section 127. This is not included in gross income.
Invest In Real Estate
Investing in real estate comes with a list of tax benefits. You can deduct expenses directly related to the operation, management and maintenance of the property. This includes property taxes and insurance, mortgage interest, property management fees, and the costs to maintain and repair the building.
You can also deduct qualified business expenses, such as office space, legal and accounting fees, travel, advertising, and business equipment.Â
Buy a Stake in an Oil or Gas Well
Kiyosaki invests in oil exploration and development partnerships with oil entrepreneurs, primarily in Texas, Oklahoma and Louisiana. If the projects are successful, Kiyosaki receives a percentage of income when the oil and natural gas is sold — which comes with tax advantages.
As the article explained, Kiyosaki making a $100,000 investment in a Texas project resulted in a 70% tax deduction. At the ordinary income tax rate of 40%, this is $28,000 on the initial investment — or a 28% return on investment.
Hire a Tax Advisor and Attorney
When your tax situation becomes more complicated, it’s always a good idea to have a tax advisor and an attorney to consult with regularly. According to Ramsey Solutions, hiring a tax advisor can save you money, save you time, give you peace of mind, help with tax planning throughout the year and help with small businesses.
Tax experts can help you position yourself correctly to take full advantage of every tax break available to you.
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