Taxes

Taxes! How does taxes affect building wealth? First of all, just like the masses weren't taught

about credit, you weren't taught about taxes. So you listen to people who claim they know about taxes and

you do all the wrong things. Some of you claim exempt because someone told you that is the way to get

the highest amount of your pay. Some of you claim head of household even though you are single because

your peers who advised you told you, you are head of household. Some of you claim deductions that you

don't have. What ends up happening, come time to do your taxes, is you discover you owe taxes or

you are not getting back too much so you're mad. You don't understand how people are

getting thousands of dollars and you're not.

Why are some people getting thousands of dollars? One, because the company they work for are

deducting from their paycheck federal and state taxes. For people with children who work either a regular

job or have their own gig or side hustle or a business there is free money called Earned Income Tax Credit

and Additional Child Tax Credit which are credits that are fully refundable. This is the redistribution of

income from the rich to the poor. These are the only people who can claim exempt from taxes because

chances are these credits will pay whatever taxes they owe. Even so, their income has to be low. If the

make over $36,000 they had better have taxes taken out from their paycheck.

Taking out taxes from your paycheck is a good thing anyway because what you don't see don't hurt you,

and what you don't get you don't spend. So think of it as forced savings which is a good thing for those

who cannot save. When you have enough taxes taken out to pay your taxes owed and get some back, that

is a good thing. When you don't have taxes taken out or not enough taxes taken out you might owe taxes.

If you are already the type who cannot stick to a budget and cannot save, how will you pay this tax debt?

Most of those I have met in the business hide it under the rug year after year after year until it

becomes a huge debt. This can then become a lien on your future tax refund, or your job or business

income, or your house if you are a home owner or even your bank account. How will you ever build

wealth if you put yourself in this predicament?

Now here is what I do with my first year clients. My first advise to them if they don't already have a

business is to dig deep down for their passion and start a business. This is a strategy that serves multiple

purpose that will ultimately help you build wealth. For those who already have businesses but are not

claiming it on their taxes, I show them how claiming the business benefits them. For those who claim the

business but under report the income, I advise them not to, and show them what to do. For all those who

listened to me, the pandemic was a blessing in disguise because they got the PPP which was stimulus

funds for businesses negatively impacted by Covid and the EIDL which is a long term low interest loan

that would otherwise be unavailable to the masses. This year, those same people are getting huge refunds

that they have never seen before.

This is a historic high for refunds. How and why? The American Rescue Act pays businesses negatively

impacted by Covid sick leave pay and FMLA. The higher your income the higher the "pay" with a

maximum of $32,220. We are getting single people over $10K, parents with children over $20K, and

truck drivers and retail businesses over $30K. So what happens after these programs are gone? Do you

continue to report your business? Absolutely!

There are so many expenses you can deduct in your taxes that could lower your overall income i.e. job

income and business income, thereby decreasing your tax liability and increasing your tax refund. Here are

some expenses that you could deduct. Set up an office space where you conduct your business activities

then a portion of your household bills can be deducted in your taxes. There is depreciation expense for

your house. Just like depreciation expense for you vehicle. A portion of all your vehicle expenses like gas,

insurance, maintenance etc. can be a deduction. Section 179 allows you to even deduct the cost of your

vehicle. Meals are a deductible. Anything you purchase for the business can be deducted and the list goes

on. There are so many strategies to increase expenses and decrease your tax liability using legal loopholes

that Donald Trump says he used to lower his tax bill. And he is absolutely correct. There are so many

legal loopholes that the ruling class knows about that the masses is kept in the dark in. Some examples

include hiring your children for your business. If you have teenage children under 18 years, pay them

without having to pay FICA. If they are 18 and over pay them up to $12550 and they don't have to pay

taxes. The income stays in the family and you pay no taxes on that portion of the income. This is how you

build wealth.

Make your money and keep as much of it as possible so you can invest what you keep and make your

money grow. Make your money and keep it in the family so you don't just build wealth, you build

generational wealth. There are many more strategies for taxes so call me if you need my individual

coaching for your individual case.

For now, this is Dr. KnowitAli signing off.