How To Pay LESS Taxes for Annual Salary Job /W2 Income (2022)

Hi Savvy investors! In this video we talk about everyone's favorite topic... taxes! It might not sound exciting, but I know paying less in taxes every year and having more money is always super exciting!

There's a lot of information out on the internet and here on youtube on how to save money when it comes to self-employment income/ 1099 income, but I know many of you and myself included have a job that pay a salary. In this video best ways to pay less in taxes when it comes to your salary job/W2 income. The main ways you can save money is through these four categories:

The benefits and strategies discuss in this videos are all ways in order to decrease you're over pre-tax salary. Using the money you make on things you're already be spending anyways, allows you to save on taxes (there's less money for the government to tax at the end of the year). On average American's pay a 29.8% tax on their ordinary income with the federal, state/local, social security and medicare. So the way I like to think of it is every dollar I put into one of these programs, I'm actually saving $0.30 in my taxes.

1) Transportation
Most work offer a pre-tax program where you can put money on a debt card that allows you to pay for your transportation cost to and from work. I know I person spend $5 everyday to get to and from work and within a year that amounts to roughly $1,200 in transportation cost alone! Using this program I'm roughly saving about 30%!

2) Health Care
Health care has two main ways to save money with taxes when it comes to your salary job. The first is using your pre-tax money to pay for your insurance plans, such as health insurance, dental, and vision. Then the second way is using a FSA or a health savings plan to pay for those medial expense. This way you're saving money for your insurance and actually expenses.

3) Investing
With investing there's two main options for using pre-tax money. First is a 401k, which is only offered by employers. The second is a IRA. Both of these have different amounts you're able to contribute to the accounts every year. For 401K in 2020, you can contribute up to $19,500. While in a IRA you're able to contribute up to $6,000 for 2020. All the money you contribute now is not being taxed at the 30%, saving you 30% on any money you contribute. Note, you will have to pay taxes later when you're retired and pulling out money, but by then the mindset it that you won't be working and therefore, in a lower tax bracket then present day.

4) Other
Check to see what kind of pre-tax benefits your employer offers. Every place is job is different and some companies might offer some great pre-tax benefits that my job doesn't offer, such as educational or stock options.

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