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Loopholes of the Rich

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Loopholes of the Rich

How the Rich Legally Make More Money and Pay Less Tax

Wiley,

15 min read
10 take-aways
Text available

What's inside?

"Loopholes" have a bad name. Hang onto your money – quite legally – by learning your way around the tax code.

Editorial Rating

7

Qualities

  • Applicable

Recommendation

This clearly written book offers a handy guide to tax strategy for the rich and for those who hope to be rich. Author Diane Kennedy, a certified public accountant, provides basic information on common tax risks and opportunities. Without using burdensome jargon, she explains the fundamentals of financial reports and record keeping. Her approach is commonsense and straightforward; she doesn’t make outrageous promises or exotic, inapplicable recommendations. The title is slightly misleading. This book is not really about loopholes, but rather about sound planning and management - especially for business owners. It does get into the minutiae of tax law, which is subject to change, so some of the details may have a short shelf life, and much of the advice will have little applicability outside of the United States. Nonetheless, getAbstract recommends this basic guide to anyone who needs a fundamental introduction to personal financial and tax management in the U.S.

Summary

The STEPS Cycle of Financial Independence

Using the STEPS cycle of financial planning can help you become more aware of your financial assets and increase your wealth. It consists of the following stages: "Starting point," make a thorough inventory of your financial position; "Team," form a group of trustworthy advisers; "Evaluation," map the path to your goals; "Plan," create your tactics; and finally, a return to the "Starting point" for a progress report and re-evaluation.

Step One: Calculating Your Starting Point

To determine your fiscal position, use financial statements that clearly outline your monetary flows and net worth. Together, the following three kinds of statements will give you a comprehensive picture of your budgetary position:

  1. "Income statement" - Lists income and expenses. The statement includes three kinds of income: earned income, portfolio income and passive income. Earned income is the money you receive in exchange for your labor, time or services - in other words, your pay. Earned income is taxed at the highest rate, which is sometimes more than 40%, depending on how much you earn. Portfolio income is the money you...

About the Author

Diane Kennedy, CPA, teaches seminars on legally, ethically minimizing your U.S. tax obligations. She is the founder and owner of a tax strategy and accounting firm, and co-author of The Insider’s Guide To Real Estate Investing Loopholes and The Insider’s Guide To Making Money In Real Estate.

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