How To Pay Little-To-No Taxes For The Rest Of Your Life

Want to learn how to pay no taxes? Or how about how to pay less taxes for the rest of your life? Read on.

I've been studying up on tax laws since 1999. You might not be able to pay no taxes. However, this post should help you pay less taxes. For most of us, taxes are our largest ongoing liability. Therefore, it behooves us to get as smart as possible about taxes.

Ever since I was 25, I paid more than $100,000 a year in taxes. You don't get a thank you card if you pay over $1 million dollars in taxes in case you're wondering. Instead, you get the government hooked on your juice with fishing letters from the IRS asking for more!

I didn't mind paying my fair share of taxes when I was in my 20s because I was excited to progress in my career. I felt lucky to just have a job that allowed me to save like crazy and help others financially through charitable donations. As I grew older, my views on income taxes changed.

It's Time To Pay Less Taxes And Save More Money

Since the turn of the century, we've witnessed a devastating war in Iraqistan that by some estimates has taken over 1 million lives. We've observed Congress do nothing to pass a balanced budget since 2008 while giving themselves pay raises every single year.

During the 2009-2010 financial crisis, the government doled out massive bailouts to institutions such as AIG while allowing executives to pay themselves millions of dollars. AIG even had the audacity to contemplate suing the federal government this year for wrongful terms! What the hell.

I felt sick to my stomach supporting such atrocities by a government who also discriminates against certain citizens while displaying no fiscal discipline. Now higher credit score borrowers must pay higher mortgage fees, while riskier borrowers get to pay less.

Why can't we all be treated equally? Why is there a marriage penalty tax? How come your Social Security benefits go back to the government if you die without a surviving spouse? I don't know.

Pay Less Taxes Because The Government Is Inefficient

When it takes 18 months for the city to fix a noisy and dangerous manhole cover, perhaps paying tens of thousands of dollars in state taxes is not worth it anymore. How about $5 bucks instead?

John F. Kennedy once said, “Ask not what your country can do for you, ask what you can do for your country.” Unfortunately, those words were spoken on January 20, 1961. Most of us weren't alive then since the median age in America is only 35. I'm afraid our society has permanently adopted a one-way take, take, take mentality.

I think I've paid my dues. Unless you've paid as much in taxes, please don't criticize me for writing an article on how to help you legally pay less taxes. To build wealth, we must minimize our expenses. Taxes are one of the largest expenses we'll ever incur.

In fact, most Americans paid no federal income taxes in 2020. The Tax Policy Center also forecasts that 57% of working Americans won't pay federal income taxes in 2021 either! Perhaps we should join the majority!

The Best Way To Pay Little-To-No-Taxes

Besides earning less money, the best way to pay little to no taxes is to make your income equal your standard deductions or itemized deductions.

For 2023, single filers get a standard deduction of $13,850 while married couples get $27,700. This is up from $12,950 and $25,900, respectively. Therefore, if you want to pay no taxes, then make up to $13,850 a year as an individual or up to $27,700 a year as a couple and voila! You won't pay any taxes.

The problem is it's hard for a single person or married couple can live off only $13,850 and $27,700 in income, respectively. Hence, forget about the pitiful standard deduction. Go for the itemized deduction which includes home mortgage interest, property taxes, and charitable givings.

Obviously you need a mortgage to be able to pay mortgage interest and property taxes, so consider owning a primary residence already. The government subsidizes your ownership by allowing you to write of your mortgage interest and property taxes.

If you want to truly make money in real estate, then you've got to own more than your primary. One way is by buying a rental property. With a rental property, you also get to take advantage of depreciation and other expenses associated with operating the property. Therefore, you earn income more tax efficiently.

As for charity, give as much as you can. It is better to give to causes you are passionate about rather than pay more taxes to the government who ends up wasting your money.

The below are three examples with some notes on how to minimize your tax bill.

How To May No Taxes On Job Income Or Passive Income

How To Pay Less Taxes Chart On Day Job Income

How To Pay No Taxes Notes

* To generate passive income, you've first got to save a lot. You can replace my passive income examples with normal wage income if you like. The effect is the same.

* What is peculiar is that one still has to pay property taxes to the state. At least property and state income taxes are deductible and the money is not going to the federal government. You can choose to move to a different state to lower your tax liability. Changing citizenship on the other hand is much more difficult.

* Starting in 2018, there is a SALT cap limit of $10,000 per person. If you get married, you actually don't get $20,000 but still only get a $10,000 limit. This is going to be a net negative for many higher income earners who own property in expensive coastal cities.

* A $30,000 mortgage interest deduction can be calculated as a 3% mortgage interest rate off of a $1 million dollar loan. Too bad the mortgage limit is now $750,000 for 2020+. Some may poo poo paying interest. But I say paying interest with other people's money to build wealth is much better than paying taxes to the government.

* If you have a modified adjusted gross income (MAGI) of $200,000 as an individual, or $250,000 as a married couple, you'll also have to pay a 3.8% surcharge tax on all capital gains and dividend income. This is called the Net Interest Income Tax. The government does not have the guts to cut spending, hence more taxes are inevitable.

* You might be wondering how does someone survive if their entire $60,000 in income goes to charity, mortgage interest, and property taxes? The answer lies in living off your savings.

The Standard Deduction

The standard deduction was increased to $13,850 per individual and $27,700 per couple in 2023. In other words, any income you make up to these levels is tax free. If you are in the 10-12% TAX BRACKET you pay zero percent tax on long term capital gains and qualified dividends up to $44,625.

2023 federal income tax brackets for singles, married

How To Pay Zero Taxes on Rental Property Income

How To Pay No Taxes On Rental Income

How To Pay No Taxes Notes

* Owning a rental property is like owning a business. All expenses related to running your rental property are deductible from the rental income. Just be careful that deductions start phasing out after you make more than around $166,000 a year.

* A key part of the expense is depreciation. Depreciation is a non-cash expense to provide a fair way for the normal depreciation of your property.

* There's no escaping property taxes again, but at least it is deductible. It's important to convince the city your property is worth the least amount possible. If you do, you can pay the least amount of property taxes.

* It's best to receive no rental income while you are in a higher tax bracket. Once you've retired, you'll probably be in a lower tax bracket. You should receive more rental income given your rent will be higher and mortgage interest and amortization will be lower.

Rental Property Is Less Passive

The only thing about owning rental property is that it scores low on the passive investing scale. The older and richer you get, the less you want to deal with maintenance and tenants.

This is where investing in real estate crowdfunding platforms like Fundrise and CrowdStreet, my two favorites, come in. Real estate crowdfunding allows you to invest in commercial real estate around the country with potentially higher returns without any grunt work.

For example, there is huge valuation and cap rate differences today between expensive coastal city real estate and heartland real estate. With real estate crowdfunding, an investor can arbitrage the valuation and cap rate differential for potential profits.

There’s no reason employees need to be stuck paying $4,500 a month for a crappy two-bedroom apartment in San Francisco or Manhattan when they can rent a massive house for half the price in Austin, Texas.

How To Pay No Taxes On Business Income

How To Pay No Taxes On Business Income

Notes On How To Pay No Taxes On Business Income

* Starting your own successful business is harder than just working a day job, but it's one of the most gratifying things you can do. A lot of your normal living expenses can be considered business expenses. For example, you can have annual board meetings in Rio de Janeiro if you want. The flights, meals, and accommodations are all expensable. Nobody says your annual board meeting has to be in a place of suffering. Everybody should at least start their own website today to take advantage of the internet and the 3 billion people online.

* As an employer and employee, you get to contribute up to $19,500 to your Solo 401K + 20% of operating profits. In this case, the person contributes $18,000 + $13,000 = $31,000 that doesn't get taxed. You can also contribute $5,000 for yourself and for your spouse in a traditional IRA. Eventually you will have to pay taxes on these pre-tax retirement accounts, but not now.

See: How To Save Over $100,000 Pre-Tax In A SEP-IRA And Solo 401k

* The business has a net profit after tax of $16,800, however you've got so many more tax shields at your disposable which can easily wipe out the tax liability.

* Business taxes are one of the most complex taxes to calculate. The above is just a simple example of how a cupcake owner with $100,000 in revenue might not have to pay any taxes at all.

How To Pay Less Taxes On Business Income Part II

How to pay less taxes like Gawker Media - create international subsidiaries

Notes On How To Pay Less Taxes

After Gawker Global filed for bankruptcy, Fortune Magazine wrote an amazing expose regarding how Gawker Global created a Hungarian subsidiary to transfer revenue to in order to pay only a 5% effective tax rate instead of a 34% effective US tax rate.

If you are feeling guilty about paying no federal income taxes, maybe you no longer should!

How Your Kids Can Pay No Taxes

One of the best ways for you to reduce your taxable income and also enable your kids to pay no taxes is to pay them from your business. Let's say you are in the 35% tax bracket. You can pay your kids to work on your business, essentially transferring your 35% tax liability to them.

If your kids earn up to the standard deduction maximum, they won't have to pay taxes. I would also encourage you to open up a Roth IRA for your kids and contribute the maximum each year ($6,000 for 2022). The contribution is tax-free, compounds tax free, and can be withdrawn tax fee after 5 years.

Recommendations On Paying Less Taxes

1) Start Your Own Small Business

I encourage everyone to start their own small business. You get a lot more flexibility with deductions as you can see in the example above. The best way to start a business is create a website like mine by signing up for a hosting company like Bluehost, which costs less than $4/month. You get a free domain name for one year too.

Once you've got your simple website up and running, you help legitimize your business. There's no need to incorporate as an LLC. Just be a sole proprietor, report your income on your schedule C, deduct all your expenses, and pay taxes on your operating profit.

Whenever I spend money on travel, it is largely a business expense because I'm always prospecting for potential clients. I expense a portion of my car lease payment given I drive down to the Peninsula to work at my consulting clients. Many of my meals are also expensed due to client luncheons and dinners.

Finally, I contribute over $50,000 a year pre-tax to a Solo 401k because I run my own business. You can check out my step-by-step guide on how to start your own website today. Once you've got your own website, you've helped legitimized your business.

2) Invest In Real Estate

If you want to pay less taxes, you need to change the composition of your income more towards investment income. Earning stock dividend income and bond income are great because they face lower marginal income tax rates.

However, my favorite tax-efficient investment income is rental property income. Because you can deduct all rental property expenses, you can lower your taxable rental income. Further, amortization is a non-cash expense which also significantly reduces your tax liability.

After you have purchased enough rental properties that you can handle (four for me), invest in 100% passive private real estate funds like the ones offered from Fundrise. Fundrise manages over $3.5 billion and invests primarily in single-family and multi-family properties in the Sunbelt.

After I had my son in 2017, I sold my hard-to-manage rental property and reinvested $550,000 in private real estate. It's been great to earn more passive income in order to spend more quality time with family.

3) Manage Your Finances In One Place

I recommend signing up for Empower, a free financial management tool online that helps you track your net worth. It also helps you analyze your investments for excessive fees. I ran my 401k through their 401k Fee Analyzer and found out I was paying $1,700 a year in fees I had no idea I was paying!

They’ve also come out with their incredible Retirement Planning Calculator. It uses your linked accounts to run a Monte Carlo simulation to figure out your financial future. You can input various income and expense variables to see the outcomes.

Personal Capital Retirement Planner
Increase your retirement success to 99% by living on less

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How To Pay Little to No Taxes is a Financial Samurai original post. I've been writing personal finance articles online since 2009. FS is one of the largest independently-owned personal finance sites online with over 1 million visitors a month. You can sign up for my free weekly newsletter here.

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156 thoughts on “How To Pay Little-To-No Taxes For The Rest Of Your Life”

  1. My friends son says he is some kind of “citizen” that doesn’t pay any taxes ever. Have you heard of such a thing?

  2. Thank you for the article, it is a lot different in Canada where we live. I feel the same regarding taxes being wasted and being over taxed.

    Again I enjoyed your article.



  3. You’re wrong. You can live off of twelve thousand dollars a year quite easily with a little bit of help, a roommate. You will need someone to live with, that ‘s about it. And your rent will be cut in half, and you can live off the rest, pay your share of the rent, along with whatever other expenses you have left. The problem with living this far down the food chain is with the government though. For example: If you walk to work, you’ll get stopped for walking, especially if you’re older in most suburbs. Also, you’ll be working in jobs which aren’t secure, and can be relived of your position at any time, which can make you homeless. People for whatever reason love to discriminate against the poor. I’ve been living off of twelve thousand dollars for the last twenty five years, while working of course, but I don’t pay any taxes any more, because now I quit my job. If you work, you still pay in taxes, especially if your income is lower. They tax you with a poor man’s tax, so really what you do, is work for twenty five years or longer, then get on social security, after losing your mind, etc, and get your money back out of the system, and then you don’t pay any taxes any longer. You’ll need a good excuse from a doctor though, and that’s about it; file your claim with a lawyer, and fight for your social security payments, then you won’t be paying in any taxes any longer, and you’ll get your income back, and can sit on your ass and tell everyone to go fuck themselves, because you’ll be rich enough to continue living this way, well, until you don’t have a roommate any longer, then you’ll be back to square one.

  4. Though I am not sure if it makes a huge tax difference for the very wealthy, but for a solid middle class person like me, I have an HSA (Health Savings account) from my work and I can put in it about $280 per month tax free. It goes from my gross pay and so my HSA has tax free money. Of course, HSA can only be used for qualified medical (and dental) expenses, but you cannot avoid medical expenses forever. There is also no cap on how much the balance can be, only how much you can put in it tax free per year. I have put in the max for a couple of years until recent, when I needed money for other things. Still I put in $100 per month and the balance is getting close to 10K now. I don’t have to worry about going to a specialist for a root canal or an extra crown. I can pay for it. If my wife or kid needs something medical, I can pay for that too. I have had HSA now for ten years and it has done miracles. Whenever you use it, remember the IRS is paying with you.

  5. interesting grade level examples, the assumption is on most that you have plenty of money to begin with to live of – not realistic for 99.99% of the population.

  6. I am a 31 year old, mother of two under two, and a perpetual student (currently considering leaving my PhD program to pursue part time work remotely).

    I am increasingly interested in learning the aforementioned tools/skillset s to support my husband’s business as well as friend/family members working towards financial independence. Would you be willing and able to work with me to learn from/create a curriculum to help hone these TIMELY tools?

    God bless you for your magnanimity.

    1. Alexander Webster

      ? What do you think a tax deduction is? It’s money you don’t have to pay taxes on. If you didn’t take it as a deduction you would be paying taxes for money that you put in your 401k.

      1. If you receive a W2, your 401(k) contributions are already deducted from the income you’ll report on your tax return. The only time you would include 401(k) contributions as a deduction are if you’re self-employed and paying into a self-employed version of a pre-tax 401(k).

  7. Deductions for state taxes or mortgage interest are UNFAIR.

    I have worked since 1970 and had several mortgages but have never had enought deductions to file long form. Why should I pay all my taxes when you rich people with your overpriced mansions get all these writeoffs?



    Better yet, replace federal income tax with a federal SALES tax!

        1. If you live in New York and your income is from NY, then you have to pay NYS taxes even if you live full or part time in another state. New York closed this loop hole in 2010 when a lot of millionaires decided to live 6 months and 1 day in sunny FLA.

    1. Or even better, abolish all taxes and move the government (wonderfully tiny as it would be) onto voluntary donations for funding.

  8. Financial Samurai,

    I need help. I make 150k a year and have to save $1,500 each month to pay taxes at years end.
    I have a lot of bills, mainly 3 mortgages on 2 homes totaling 9k, 450$ credit card payment, utilities, tuition and some life Insurance. I was thinking of getting a second job to pay for sons college but that would put me to save even more for taxes. I made a huge mistake investing heloc cash that was stolen in the great recession and suffering for it.

  9. lets say your bought a building for $1 million. with the mortgage, you are paying close to $2 million. the mortgage interest deduction from the rental income is so tiny, is it really worth not buying the building with cash? at the end of the day is it worth paying more on the mortgage that what you will save on the taxes?

  10. Hey Sam,

    Do you have a recommendation for a solo 401k that has cheaper fees? There’s a mention in the article, but no link to any particular one…


  11. I am 60 yo, have 5 rental homes as a business. Another Business, Horse lessons. Wife is a contract computer person. Your examples are really geared toward 1 million dollar properties or more. my typical rental house is worth $200,000, interest $5000, HOA $400, tax = $2500, repairs $2000, income for one $16,000. Now, my plan has been to build an income, so I can retire and also leave my Son a money machine. 4 of the 5 homes will be paid off soon. I do realize, that locations change character and am planning on selling then buying in a different area utilizing the 1031 tax exchange. Have done before. But your example numbers are sort of like a hotel in New York. A bit scary. And yes, you have little money to live on. It all works if you have 5 million in the bank then do your examples. And I deduct everything I can and year end taxes just kill me.

    1. I will be earning (and working extremely hard for it) $130000 in online poker by 2022. The tax is about $25%. It’s killing me knowing that, although poker is not integrated with Free Competitive Enterprise, somehow my government thinks my 100K is taxable. Wrong. Well that’s the reason I must make an additional $30000 (to make up for otherwise $70000). This is criminal. I will be getting my talent taxed. The casino should be taxed, but not me. This is casino responsibility. Taxes are not the reason poker exists as acceptable. This is my risk, my sacrifice, and my endurance. I have nothing to do with the US government in this manner.

      So, I understand.

  12. I have employment income, and max out my contributions at 20% which is company matched. If I start my own business, can I contribute an additional amount to save additional taxes?

  13. Also consider utilizing savings strategies that grow tax deferred and the money can grow with uninterrupted compound interest over long periods of time. This is called The Infinite Banking Concept. If done correctly, paying taxes only once on the seed and compounding over mulitple generations then you too can be like the Rockefellers and other wealthy Dynasties. Hence the reason I called my business Dynasty Banking!

  14. Some interesting ideas. An HSA is like an IRA for all practical purposes if you have a high deductible health plan. This can shelter an additional 6700-7700 per year.

    The paying interest is a sucker bet. If I have the option of paying 30,000 in interest or 30% of that 30,000 in taxes, I’m paying the tax…unless I am leveraging that money to make more. IF it’s interest on my own house, forget it.

  15. Hi, I just graduated from college and got a new job this month in SF Bay Area. The income tax is very high, a total of 35% taken off from my salary. How should I avoid paying this much? Should I create an LLC or an s-corp and report losses to that side business? become a contractor?
    What is the best way for a young single professional who is struggling to make ends meet due to high rent, deal with lowering taxes?

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