If you are a W-2 employee, there’s not much you can do to pay less tax. Used to be you could invest in real estate and create paper losses to offset your income. The IRS has made that increasingly difficult to do.
There’s only one tried and true way to pay less tax. Start a business.
If you have a business, there is one big difference in how you pay taxes.
As an employee, this is how you get paid:
You get to spend what’s left over after the government takes their share.
As a business owner, this is how you get paid:
In this case, the government waits for its money. As a business owner, you decide when to pay and, to a large degree, even how much you pay.
On average, a person with a job making $50,000 will pay $10,000 more in taxes then a person who has a business that pays him $50,000.
The next time you’re thinking about picking up some overtime or getting a second job to create more cash, you may want to think about starting a small business instead. You will get paid more. You will control more. And you will keep more.