Thread by @APompliano

Between 2014 and 2018, Warren Buffet reported $125M in income. His effective tax rate was only 18.9%.

Buffet, Bezos, Elon, and other wealthy Americans use the tax code to their advantage and keep more of their $$ to invest.

Here are a couple of their tricks you can use 👇👇👇

1/ Nothing that Buffet, Bezos, Elon, and other wealthy Americans do is illegal. The basic approach is simple:

They minimize their reported income and take whatever deductions are available -- donations, losses, retirement contributions, and more.

2/ Without using any deductions or loopholes, Buffet would have paid close to $50 million in federal income taxes. In reality, he paid less than half of that -- only $23.7 million.

So how did he cut his effective tax rate in half?

3/ First, a lot of Buffet's income comes in the form of capital gains, not wages. Long-term capital gains are taxed at 20% while the top income tax bracket is 37%.

Second, Buffet and other wealthy Americans have mastered reducing their taxable income.

4/ There's a lot of ways to legally reduce your taxable income including:

Charitable donations
1031 exchanges
Tax-loss harvesting
Deductions for interest payments
Retirement Contributions

Anything the wealthy can do to take advantage of the system, they do. Act accordingly.

5/ While some methods are more attainable for the ultra-rich like Buffet, the most accessible way to reduce your tax burden every year is to contribute to your retirement account.

And the most effective way to avoid taxes on your capital gains is to trade in an IRA.

6/ The trouble with that is, historically, IRAs have limited what you're allowed to invest in to cookie-cutter funds.

@choicebykt tore up those limits - now you can stack sats & trade 18 other digital assets alongside stocks & ETFs - all with no capital gains.

7/ There are two main types of IRAs -- Traditional IRAs and Roth IRAs. While both are tax-efficient, Traditional IRAs lower your taxable income NOW while Roth IRAs reduce your tax burden LATER.

The best part? You don't have to pay capital gains taxes when you trade in either 🤯

8/ If you open a Traditional IRA with @choicebykt, contributions are deductible but you have to pay income taxes on your withdrawals, even after the age of 59½.

You can reduce your taxable income in 2021 by $6,000 (this is the max contribution for most people, but DYOR).

9/ Or if you open a Roth IRA like Peter Thiel, your contributions aren't tax-deductible, but you don't have to pay ANY tax when you withdraw it, as long as you wait until you're 59½.

That means you'll have tax free income in the future 💰💰💰

https://twitter.com/APompliano/status/1366188811303141379

10/ To summarize:

1. Warren Buffet & other rich Americans do everything they can to game the system & pay less taxes (legally) & you can do the same.

2. One of best ways to do that is by contributing to a retirement account like @choicebykt. (Exactly why they sponsor podcast!)

Oh, and @choicebykt doesn't limit you to cookie-cutter, target-date funds. You can buy bitcoin & other digital assets in your IRA.

You can even hold your own keys.

So what are you waiting for?
retirewithchoice.com/pomp