Get a Big Tax Refund! 5 Ways Millionaires Make More Money and Get Tax Write-Offs
If you went out to get a loan to get a car or a house, you would be expecting to pay interest. If the table were turned and somebody borrows money from you, then you would be charging them interest too.
Keeping this in mind, it is easy to realize that those people who are getting large sums of tax refunds are actually giving an interest-free loan to the government. The government just uses the money as they see fit and return you back your money without paying any taxes on it.
If you want to save yourself from this unused opportunities and reduce your overall tax obligations to the government, there are five things you can do:
1. Own A Business
America’s financial system is structured in a way to provide incentives to people to start and run a business. After all, America is a capitalist country and the more businesses there are, the more it grows as a country. That’s why it is paramount to understand that owning a business is really beneficial.
You can deduct a lot of your expenses from your income which reduces your overall tax obligations. This means that you are paying out fewer taxes that will simply form a surplus with the government.
2. Earning Money From Capital Gains
Capital gains are the profit that you make from an investment. When you buy a stock, asset or anything and sell it for a profit within a year, the profit is categorized as short term capital gains. When you sell after a year, it is taken as long term capital gains. If you choose to go the long-term investment route, you would be coughing up much more as taxes versus the short-term investment.
3. Earning Money From Dividends
A dividend is money paid to an investor from the profit of a company. As with long-term investments, dividends are taxes based on your taxable income. It can be anywhere between 0-20% depending on your income. In order to benefit from the tax advantages of dividends, they need to meet the requirements of a qualified dividend so that you can be taxed at a lower rate.
4. Millionaires Buy Lots of Life Insurance
Millionaires use the life insurance industry for the tax shelter and the tax haven it creates. Wealthy people put their money into permanent life insurance as opposed to general term insurance. Doing so gives them two benefits from tax laws. One of these laws states that money that’s inside of a life insurance policy is transferred tax-free to the beneficiary and the second one states that money can grow inside the policy and can be withdrawn without paying anything in taxes.
5. Deducting Depreciating Assets
If you buy assets that depreciate over time through our business, you can deduct these from your income which reduces your taxable income. Things like cars, furniture, machinery, computers, software, and other things fall into this category of depreciating assets.